Aluminum: Focus on the "Crossroads" of September Macroeconomics, Shanghai Aluminum Awaits Breakthrough Momentum
Over the past month, industrial metals have not been the top choice for bullish capital, with confidence in long positions waning, leading to profit-taking and short-selling after rebounds to high levels. This partly explains why Shanghai aluminum (SHFE) faced repeated resistance around the 20,000 yuan/ton level, especially with positions decreasing during this rebound.
Since late August, prices of domestic and international metal futures underwent continuous corrections from their highs. However, after major industry policy announcements on September 9, the market saw a temporary stabilization and rebound. For instance, on the evening of September 9, non-ferrous electrolytic aluminum rebounded strongly from the key 19,000 yuan/ton support level. By the close of trading on September 10, the SHFE aluminum main contract (2410) settled at 19,390 yuan/ton, with a daily increase of up to 1.15%.
The current rebound in non-ferrous and ferrous metals is partly due to short covering after extended corrections and also fueled by the significant announcement of China's expansion of its carbon emissions trading market. The policy now includes steel, electrolytic aluminum, and cement industries, signaling further supply-side reform and higher costs for high-energy-consuming sectors. This policy also boosts metals like copper, nickel, and lithium, linked to green energy.
In the short term, the emotional impact of the policy announcements may outweigh their actual effect on the industry, leading to temporary bullish sentiment. Aluminum prices have weakened recently, with rising costs squeezing industry profits, and some capacities are already experiencing losses. With alumina prices remaining high and leading companies seeking to protect profits, production costs will likely limit the downside for aluminum prices.
Currently, Shanghai aluminum is expected to fluctuate, reflecting a decent peak season and marginal improvements in the fundamentals. Looking ahead, the market's directional momentum hinges on key macroeconomic events in September, particularly the U.S. presidential debate on September 11 and the Federal Reserve's policy decisions on September 19. In the short term, aluminum prices are anticipated to oscillate between 18,500-20,000 yuan/ton, awaiting a breakthrough. In the longer term, attention will be on how macroeconomic policy shifts and the interplay between speculative capital and industry fundamentals shape the market.
