SHFE aluminium futures closed at RMB 23,300 per tonne, up 1.44%, according to Shanghai Metals Market (SMM), as reported by AL Circle. Prices broke firmly above the 5-day (23,057) and 10-day (23,082) moving averages, but upside remains capped by the 30-day (23,802) and 60-day (23,772) averages. SMM described the move as a strong rebound after oversold conditions.
The MACD lines (DIF at -265.99, DEA at -229.00) remain below the zero axis, but the green bars narrowed sharply to -73.98 from -156.23 the previous day. SMM interprets this as a significant decline in bearish momentum and the initial emergence of a technical bullish divergence. Trading volume reached 102,100 lots, which SMM attributes to active bottom-fishing.
SMM suggests a core trading range of RMB 23,000-23,800 per tonne for SHFE aluminium. LME aluminium closed at USD 3,037.5 per tonne, up 0.35%, according to the same SMM analysis. Prices have stabilised above the 5-day (3,026.7) and 10-day (3,024.9) moving averages but remain well below the 30-day (3,148.6) and 60-day (3,205.4) averages, and SMM considers the medium-term downtrend intact.
The MACD lines (DIF at -56.52, DEA at -56.71) formed a golden cross below the zero axis, with the histogram turning positive at +0.37, which SMM describes as a sign of exhausted bearish momentum and a clear short-term repair signal. SMM suggests a core trading range of USD 3,000-3,050 per tonne for LME aluminium. The article places the market against a geopolitical backdrop.
Reports indicate that Israeli Prime Minister Netanyahu instructed the military earlier in October to plan a new large-scale offensive against Iran, with targets including civilian infrastructure such as power plants and nuclear facilities. The plan was ultimately not implemented due to opposition from US President Trump to resuming hostilities before the November midterm elections. A White House spokesperson reiterated that the US would not attack Iran at any time before the midterm elections.
Iranian Foreign Minister Araghchi stated that the US and Israel may launch a new war against Iran and that Iran is fully prepared and on high alert. On the fundamentals side, SMM notes that ex-China aluminium production resumptions and new capacity ramps continue to advance, with expectations of ample supply in the forward curve weighing on futures sentiment. LME aluminium inventory has fallen to a historic low of 238,400 tonnes, but macro conditions remain pressured by expectations of tightening ex-China liquidity.
In China, social inventory briefly built up during the National Day holiday before resuming its decline. According to SMM statistics, as of Thursday, China's aluminium ingot social inventory fell by 24,000 tonnes week on week from Monday and by 53,000 tonnes from the previous Thursday. SMM says the post-holiday inventory build has shifted back to destocking, which confirms consumption resilience.
SMM also flags marginal risks: China's September proportion of liquid aluminium fell short of expectations, October is expected to pull back slightly, and casting ingot output is rising month on month, increasing the marginal supply of aluminium ingot. Separately, China exported 558,600 tonnes of aluminium semis in September, up 1.2% from 552,100 tonnes in August, exceeding market expectations. Spot premiums varied by region.
In central China, actual transaction prices centred on a premium of RMB 140-160 per tonne against the SHFE aluminium November contract, as weak end-use demand and high premiums limited buying from downstream processors, and some suppliers sold quickly to clear inventory. In East China, SMM A00 aluminium ingot spot transactions closed at a premium of RMB 270-290 per tonne. In South China, spot premiums were concentrated at RMB 185-225 per tonne against the SHFE aluminium 2611 contract.
SMM reports that the spot market there shows signs of bottoming out, and that a pullback in the basis stimulated buying, with many buyers purchasing at discounts to replenish inventory. In the scrap segment, SMM A00 aluminium closed at RMB 23,610 per tonne, up RMB 80 from the previous trading day, and aluminium scrap prices generally rose by RMB 50 per tonne. As of October 21, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was approximately RMB 2,107 per tonne, and the difference against shredded aluminium tense scrap was approximately RMB 553 per tonne.
SMM reports that tax inspections in central China continue to deepen, making compliant invoiced aluminium scrap increasingly scarce, with some enterprises able to issue only 20% of their quota. SMM expects the scrap market to hold up well in the short term with limited downside. It also notes that the spread between A00 aluminium and scrap has narrowed again to historical lows, weakening the economic advantage of scrap and bringing the issue of primary aluminium substitution back into discussion.
In secondary aluminium alloy, SMM's ADC12 quote remained unchanged from the previous day at RMB 24,500 per tonne. Although aluminium prices rebounded, the recovery was limited, and enterprises lacked the momentum to raise quotes, while downward pressure has not clearly emerged. SMM expects ADC12 prices to move sideways in the short term.
In its comprehensive outlook, SMM notes that rising expectations of US Federal Reserve interest rate hikes, a strong US dollar and high US Treasury yields continue to pressure valuations of nonferrous metals. On the supply side, ex-China production resumptions and new capacity launches weigh on futures sentiment, while continued destocking in China still supports aluminium prices near the bottom. Note: This article is based on content shared by SMM and published by AL Circle with its original information and without modifications to the core subject or data.
Source: alcircle.com