According to Securities Times, on November 13, Shanghai aluminum futures surged again on the domestic futures market, with the main contract 2601 hitting a new annual high of 22,100 yuan per ton.

Aluminum prices have shown an overall upward trend amid volatility recently. Following a strong rally since late October, they have repeatedly set new annual highs. This trend stems from the simultaneous release of macroeconomic catalysts—including consensus in U.S.-China tariff negotiations, the Fed's expected rate cut, and easing Middle East geopolitical tensions—alongside fundamental support from restricted northwest aluminum ingot shipments during the heating season and reduced arrivals in East China. It also reflects aluminum's heightened financial attributes amid ample liquidity.

Multiple Positive Factors Provide Support

Since late October, aluminum prices have exhibited an upward trend amid volatility.

The average monthly spot price for A00 aluminum in China was 21,000 yuan/ton in October, marking a month-on-month increase of 1.26% and a year-on-year rise of 1.40%. The monthly high was 21,300 yuan/ton on October 31, while the low was 20,800 yuan/ton on October 13, with a price spread of 470 yuan/ton.

Entering November, aluminum prices continued their upward trajectory. As of November 10, the daily average price of domestic spot A00 aluminum stood at 21,500 yuan per ton, marking a 0.14% increase from the previous month. Compared to October's low, prices have risen by 690 yuan per ton, representing a 3.32% increase.

Multiple macroeconomic tailwinds undoubtedly provided robust support for aluminum prices.

On the news front, the Federal Reserve announced a 25-basis-point rate cut as expected in its policy decision early on October 30 Beijing time. This move eased global liquidity pressures and boosted market risk appetite.

On October 30, the US and China reached a consensus in their tariff negotiations, agreeing to reduce trade barriers on certain aluminum products. This includes lowering the tariff on fentanyl from 20% to 10% and suspending the 24% reciprocal tariff for one year. These developments significantly eased market concerns over export restrictions, creating favorable conditions for aluminum processing enterprises to secure orders.

Simultaneously, easing geopolitical tensions in the Middle East reduced energy price volatility risks, indirectly stabilizing energy cost expectations across the aluminum supply chain. However, disruptions in overseas supply further amplified bullish effects. Following production cuts at an Icelandic aluminum plant due to equipment failures, an Australian aluminum plant faced potential shutdown risks over electricity costs. Limited global supply elasticity for primary aluminum provided upward support for international aluminum prices.

Entering November, the aluminum market maintained its bullish tone. Supported by multiple macroeconomic tailwinds and ample capital flows, aluminum prices extended their rally, repeatedly hitting new yearly highs.

Supply-Side Constraints Dominate

The tight supply-demand balance forms the core foundation for aluminum's elevated pricing, with supply-side constraints being particularly pronounced. With the heating season officially commencing in northern China, transportation restrictions in the main production areas of Northwest China have reduced the efficiency of aluminum ingot shipments. This has led to lower arrivals in East China, highlighting regional supply tightness. Nationwide, operational capacity for primary aluminum has reached the policy red line of 45 million tons, with very limited net new capacity additions. The capacity utilization rate has remained above 96%.

Although a small amount of technical upgrade capacity has resumed production in the southwest region and replacement capacity has come online, coupled with the continued release of hidden inventory during the National Day and Mid-Autumn Festival holidays, resulting in relatively higher arrivals in the south, this is unlikely to offset the price-supporting effect of sustained destocking in East China's social inventory in the short term. The fluctuating social inventory of aluminum ingots, which remains at low levels, further confirms the tight supply situation and provides some support for prices.

However, the divergence in aluminum demand remains the key factor constraining price gains.

Downstream demand showed overall strength in October, exhibiting seasonal characteristics. Yet as the “Silver October” period concluded, leading downstream processors saw slight declines in operating rates and contraction in end-user orders, signaling an industry transition toward the off-season in November. By sector:

- Construction profiles saw operating rates dip to around 50% due to winter preparations in northern regions, with modest order volumes.

- Aluminum wire and cable demand remained stable amid ongoing State Grid tenders, though terminal acceptance slowed amid persistently rising aluminum prices.

Overall, insufficient demand follow-through is capping price gains.

Fourth-Quarter High-Level Volatility

Looking ahead, aluminum prices from November to December will exhibit a high-level oscillation pattern characterized by “downward support and upward resistance.” Macro-wise, factors including the US-China tariff window period in November (monitoring export changes), unresolved overseas supply disruptions, potential further Fed rate cuts in December, and low inventory levels will collectively support prices at elevated levels. However, demand will gradually transition into the off-season in the latter part of Q4. Contracting end-user demand and a gradual decline in downstream processing plant operating rates will weigh on aluminum prices.

The spot A00 aluminum price is projected to range between RMB 20,500/ton and RMB 22,000/ton from November to December. Specifically, prices may hit a new annual high in November driven by macroeconomic factors, but could gradually weaken in the latter half of the month as bullish factors are digested. December is expected to see prices remain elevated with a narrow range and a weakening trend. In the short term, market participants should monitor developments in news flow, changes in supply arrivals in East China, the pace of downstream restocking, and disruptions to overseas supply. Longer-term focus should be on tracking shifts in expectations for Federal Reserve interest rate cuts, as well as production levels and order volumes across different demand sectors during the off-season.

As an integrated internet platform providing benchmark prices, on November 17, the aluminum benchmark price on SunSirs stood at RMB21,920.00 per ton, marking a 2.94% increase compared to the beginning of this month (RMB 21,293.33 per ton).

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