LME inventories hit a record low of 271kt even as oil slides to $88. The tape holds at $3,171 on physical tightness.LME 库存降至 27.1 万吨的历史新低,油价跌至 88 美元;实物偏紧令盘面守在 3,171 美元。

1 · Market Performance

Data LME 3-month aluminum, Monday July 27 confirmed close

• Monday July 27 confirmed close ~$3,171.00/mt, +0.19% d/d (+$5.95 from Friday’s $3,165.05; TradingEconomics) — the latest confirmed settlement. What matters is the context in which it closed green: on the same session Brent’s September contract collapsed 8.7% to $88.36, meaning the driver of last week’s rebound — the energy/supply-risk premium — was fully drained, and aluminum did not follow it down. Intraday it printed ~$3,170 (+0.3%) at 08:30 GMT (Mining Weekly).
• Up ~2.3% over the past month and ~+20.4% YoY (TradingEconomics basis); the rebound off the early-July four-month low of $3,085 has been preserved, but the $3,200 hard cap remains the pivot — unbroken on three attempts.
• The reason it held as the premium exited is now quantified: LME stocks fell to 271,275 mt on July 24, the lowest in LME records back to January 1998 (undercutting the August 2022 post-invasion low of 271,450 mt) and less than one day of global consumption; on-warrant stocks stood at 245,350 mt, the lowest since April 2025. The bull case has swapped anchors — from a war premium to a record-low exchange stock, which is slower, more structural, and far harder for a single peace-talks headline to erase (interpretation).
• Structure (est.): $3,171 sits above MA5 (~$3,163) and MA10 (~$3,140), roughly on MA20 (~$3,168); still capped by MA30 (~$3,240) and MA60 (~$3,390). $3,200 above remains unbroken; support has risen to MA10 (~$3,140), then $3,120.

View SHFE aluminum, most-traded AL2608 (estimated)

• View No confirmed SHFE day-session close was available at the time of writing. Backing it out of the spot basis: on July 27, SMM East China traded at ~−20 CNY/mt discount to parity against the 08 contract with the Shanghai ingot average at ~23,200 CNY/mt — implying AL2608 around 23,200–23,250; netting LME’s small gain against the oil collapse, we estimate a 23,150–23,300 band, a touch above last week’s range and still rangebound.
• Structure (est.): support MA10 (~23,050)/22,900, resistance 23,300/23,400; range ~22,900–23,400.

View Level assessment

• Both boards sit in the upper half of the range — neither at highs nor back at the early-July lows: a consolidation zone of a rising floor against a capped ceiling. The bull anchor has switched from a geopolitical premium to a record-low stock; the bear pressure has switched from oil to the dollar and the Fed.
• SHFE: support MA10 (~23,050) / 22,900; resistance 23,300 then 23,400.
• LME: support MA10 (~$3,140) then $3,120; resistance the $3,200 hard cap then MA30 (~$3,240). Three tests of $3,200 have failed — a confirmed break on volume is required to open upside.
• Direction hinges on tonight’s FOMC decision and the Warsh press conference, the dollar (~101.50), whether LME stocks keep setting record lows, and whether China’s destock breaks below 1 Mt to offset the billet build.

2 · Prices & Related Markets

Data/latest (LME is the July 27 confirmed close; several China spot prints are the July 27 SMM caliber)

• SMM A00 / Shanghai spot ingot: ~23,190–23,210, average 23,200 CNY/mt, flat ↔; Changjiang (Wuxi) average 23,200 (+10) ↑; Nanhai (Foshan) average 23,260, flat ↔ — quotes steadied with the board, with tight spot still supportive.
• East China premium/discount: July 27 trades at parity to +10 vs the SHFE 07 contract; ~−20 to parity vs the 08 contract ↔ — with aluminum prices lower, buying sentiment improved M-o-M: the East China shipment sentiment index read 3.08 (+0.04) and the buying sentiment index 3.16 (+0.06); spot-futures traders bought actively at low discounts, gradually lifting offers, while downstream processors — short of end-user orders — stayed reluctant.
• Central China (Henan): ~−100 to −120 CNY/mt vs the 08 contract ↔ — Monday began next-month-invoice trading and suppliers were not strongly willing to hold prices firm; current-month invoices traded more actively on tight availability; overall turnover was “mediocre,” with only a few rigid-demand buyers procuring.
• LME aluminum: Monday $3,171.00 (+0.19%) confirmed ↑ — closing green on the same day oil fell 8.7%, driven by the record-low stock print.
• LME stocks: 271,275 mt (July 24), the lowest in records back to 1998 ↓; on-warrant 245,350 mt (lowest since April 2025).
• ADC12 (secondary alloy): ≈24,100 CNY/mt, flat ↔; tight scrap plus a seasonally wide spread to primary lend cost support.
• Alumina: softness persists ↓ — SMM alumina index ~2,720 CNY/mt, futures most-traded ~2,710 (July 24); regional spot: Shanxi 2,750, Henan 2,760, Shandong 2,735, Guizhou 2,780, Guangxi 2,640; imported ~$345/mt FOB; four-market weighted ~2,548 — the lone laggard, still lowering the cost floor.
• Crude: Brent ~$87.83 (July 28, −0.09%) ↓; Monday’s September contract settled at $88.36, −8.7% on the day — the US and Iran suspended strikes, Tehran halted retaliatory operations and opened separate Oman-brokered talks on Strait of Hormuz shipping safety; Trump said talks with Iran were “good”; Caspian Pipeline Consortium exports resumed after Ukrainian drone attacks. Three straight down sessions — the supply-risk premium is essentially cleared.
• Dollar index: ~101.50 (July 28, −0.03%) ↑ — Monday’s haven unwind pushed the dollar lower against every G10 peer, yet the index has recovered to ~101.5, back near the July-23 high, ahead of the decision.

View

• The most important change today is not the price but the inventory caliber: LME stocks at their lowest since 1998 and below one day of global consumption turn “tightness” from an expectation into a realized physical fact — which is precisely why the oil collapse failed to break aluminum.
• But cost and macro softened at the same time: alumina keeps sliding and lowering the cost line, the dollar is back at 101.5, and the FOMC is hours away — upside stays double-gated by $3,200 and the Fed.

3 · Inventory

Data/latest

• LME stocks (the key new variable): 271,275 mt (July 24) — the lowest in LME records back to January 1998, below the August 2022 post-invasion low of 271,450 mt; equal to less than one day of global consumption; on-warrant stocks 245,350 mt, the lowest since April 2025. Duncan Hobbs, research director at Concord Resources: “The aluminium market is so much larger today than it was 25 or so years ago, so LME stocks relative to the market size are very, very low today.” Reporting also notes that the majority of available inventory is Russian metal — a caveat on the quality of that availability, which makes deliverable flexibility smaller still.
• China ingot: destocking continues — SMM major-consumption-area caliber ~1.022 Mt, with draws concentrated in Guangdong and Wuxi; the 1.0 Mt level is in sight; a cumulative ~440 kt drawdown from the early-May peak near 1.465 Mt. The direction is still lower, but weekly withdrawals have slowed clearly from the ~170 kt near-four-year single-week high — momentum is fading at the margin. (Calibers differ across SMM series; all trend lower.)
• Billet: major-consumption-area social inventory ~121 kt on July 23, a second straight week of buildup (+1 kt vs the prior Monday, +6.5 kt vs the prior Thursday); ~24.5 kt below the same period in 2025. July 14–20 billet warehouse withdrawals were 33 kt, −9.1 kt WoW and −19 kt YoY; processing fees have pulled back to near the production cost line (the subject of a dedicated SMM piece asking whether they hold).
• Secondary aluminum alloy (foundry alloy) ingot social inventory ~25.9 kt — an 8th straight week of draws at a slowing pace, with tax-invoice circulation a constraint. SHFE cast aluminum alloy registered warrants were 17,368 mt on July 27, −573 mt d/d.

View

• Inventory is now the first-order bullish support, and its strength has been upgraded: ex-China (record-low LME stocks, most of the available metal Russian) and China (major areas closing on 1 Mt) are tight together, putting a genuine floor under price — the direct reason the tape did not break once the premium exited.
• But the internal structure is diverging: ingots still drawing, billet building for a second week with fees at cost, weekly withdrawals slowing — the risk that the off-season signal transmits from the processing end to the ingot end cannot be ignored. Key tells: whether the next ingot print breaks 1 Mt, whether the billet build widens, and whether LME stocks keep grinding lower.

4 · Macro Factors

Data/latest

• A live decision (this week’s biggest variable): the July 28–29 FOMC — decision July 29 at 2:00pm ET, Warsh press conference at 2:30pm, no Summary of Economic Projections. CME FedWatch (July 27 snapshot) — hold ~65.7%, +25bp ~34.3%; consensus is “hold now, hike in September,” but roughly a one-in-three immediate-hike probability makes this a genuinely live meeting.
• The inflation tail cleared with oil: June CPI 3.5% YoY (below the 3.8% consensus) and a soft June PPI; the Red Sea/Hormuz conflict briefly drove Brent above $100 as an inflation tail, but three straight down sessions have brought it back to ~$87.8 — the energy-inflation tail has softened markedly and Treasuries rallied across the curve.

• Dollar index ~101.50 (July 28, −0.03%) ↑ — Monday’s haven unwind weakened the dollar against every G10 peer, but the index has recovered to near the July-23 high; still broadly bearish for metals.
• Geopolitics/energy (premium cleared): the US–Iran strike pause ran to a third day, Tehran said it had halted retaliatory operations and opened separate Oman-brokered talks on Hormuz shipping safety, and Trump said talks with Iran were “good”; Brent fell 8.7% Monday to $88.36 and traded ~$87.83 Tuesday. But the supply damage already happened: per reporting, Iranian attacks in late March struck the Gulf region’s two largest aluminum smelters, and continued Strait disruption still complicates Gulf producers’ raw-material imports and metal exports — the Gulf supplies roughly 9% of global primary aluminum capacity.
• Equities/risk sentiment: the S&P 500 rose to ~7,454 (+0.57%) on July 27 as cheaper oil and peace-talk hopes lifted risk appetite; Treasuries rallied as inflation fears eased. Also this week: mega-cap tech earnings (Microsoft/Meta/Apple/Amazon) and Thursday’s Q2 GDP + June PCE.
• China: LPR unchanged (1Y 3.00% / 5Y 3.50%); Q2 GDP +4.3% YoY (H1 +4.7%); June exports +27% YoY, manufacturing PMI 50.3; property investment ~−18%, still the main drag. The late-July Politburo meeting is the domestic policy window to watch.

View: impact on aluminum

• Bullish: LME stocks at their lowest since records began in 1998 (271,275 mt, under one day of consumption, most available metal Russian); China major areas ~1.022 Mt with 1 Mt in sight; secondary in an 8th week of draws; a prospective H2 global deficit (~930 kt); elevated ex-China premiums; realized Gulf capacity damage; falling oil softening the inflation tail and the “forced-hike” risk; China June exports hot and PMI in expansion.
• Bearish: the dollar back to ~101.50; a live July 29 FOMC (~34% hike); $3,200 unbroken on three attempts; alumina still sliding and lowering cost support; off-season demand plus a two-week billet build, fees at cost and slowing withdrawals; de-escalation clearing the supply-risk premium; weak Q2 GDP with property at −18%; ex-China restarts/new capacity a medium-term pressure.
• Net: floor-deepens-cap-intact — the bull anchor has been swapped from a war premium to a record-low exchange stock: higher quality, slower burn; the bear pressure has been swapped from oil to the dollar and the Fed. Tonight’s decision is the only near-term arbiter.

5 · Fundamentals

Data: ex-China regional premiums remain elevated (tighter-supply expectations)

• Overseas supply: the Gulf supplies ~9% of global primary capacity, and late-March attacks struck the region’s two largest smelters, with continued Strait disruption still complicating raw-material imports and metal exports — even with a ceasefire, capacity and logistics take time to repair, and that is the real supply damage that survives the premium’s exit. Medium-term drags come from Indonesian/Middle East restarts and new capacity. Guinea (~40% of global bauxite, ~70% of seaborne exports) is pushing local processing and export curbs and faces rainy-season disruption — a medium-term bauxite risk; Q3 standard-grade Guinean bauxite term contracts settled near $75/dmt CIF China.
• Domestic supply: operating capacity ~45.31 Mt/yr (pressing the 45 Mt policy ceiling; installed ~46.1–46.3 Mt); output near capacity, the liquid-aluminum share ~77.2% (+0.7 ppt M-o-M). The market is seen shifting from surplus toward a deficit through H2-26 (~930 kt global).
• Alumina: operating capacity ~96.2 Mt/yr, utilization ~78%; output growing ~8% (outpacing metal) → the surplus persists and prices keep easing (SMM index ~2,720, futures ~2,710, four-market ~2,548) → smelter costs lower, profit elevated, cost support eroding; new Indonesian refinery projects are the main Q3 pressure.
• Downstream: high-temperature off-season; leading processor operating rate ~61.3%; PV/grid/auto/export supported by the export recovery (June exports +27%); construction/property weak (property investment −18%); packaging steady; billet processing fees are at the cost line with a two-week build, reflecting marginally softer off-season processing demand.
• Spot sentiment: East China firmest (−20 to parity vs 08, both sentiment indices improving, spot-futures traders buying the dip in basis); Central China mediocre (−100 to −120 vs 08, next-month invoices opened with suppliers not holding firm); South China subdued (rising arrivals, tax-invoice constraints).

View

• Both sides of the balance are “slowing down” at once: supply (record-low LME stocks, damaged Gulf capacity, the capacity ceiling) offers slow-variable support; demand (off-season, billet build, fees at cost) offers slow-variable pressure — which argues for a continued range rather than a directional move.
• The tug-of-war updates to: “LME stocks lowest since 1998 + China closing on 1 Mt + elevated ex-China premiums + Gulf capacity damage vs a 101.5 dollar + a live FOMC + $3,200 unbroken on three tries + alumina still sliding + a billet build with fees at cost.”

6 · Primary Aluminum Spot Market

Data/latest (July 27 SMM caliber)

• East China: with aluminum prices lower, buying sentiment improved M-o-M; trades at parity to +10 vs 07, ~−20 to parity vs 08; shipment sentiment index 3.08 (+0.04), buying sentiment index 3.16 (+0.06); spot-futures traders bought actively at low discounts and gradually lifted offers, while downstream processors, short of end-user orders, stayed reluctant.
• Central China (Henan): Monday opened next-month-invoice trading and suppliers were not strongly willing to hold firm; current-month invoices traded more actively on tight availability; overall turnover “mediocre,” with only a few rigid-demand buyers procuring; ~−100 to −120 CNY/mt vs 08.
• South China: rising arrivals and weak end-use; tax-invoice circulation still a constraint; broadly wait-and-see.

View

• The key detail today is who was buying: the improvement was driven by spot-futures traders picking up metal at a low basis, not by a genuine pickup in downstream consumption — discount the sentiment-index rebound accordingly.
• If the China destock breaks 1 Mt while LME stocks keep falling, tight spot should convert into firmer premiums; but off-season order books and the billet build cap near-term elasticity.

7 · Key Price Drivers

Bullish

• LME stocks 271,275 mt (July 24), the lowest in records back to 1998 and less than one day of global consumption; on-warrant 245,350 mt (lowest since April 2025), with most available metal Russian — the strongest and already-realized bullish support of this cycle.
• Accelerating China destock (SMM major-area ~1.022 Mt, 1 Mt in sight, Guangdong/Wuxi led); secondary alloy in an 8th week of draws.
• Structural shift toward an H2-26 deficit (~930 kt global); operating capacity ~45.31 Mt at the 45 Mt policy ceiling.
• The Gulf supplies ~9% of global primary capacity, its two largest smelters were struck in late March and Hormuz logistics remain disrupted — realized supply damage that a ceasefire does not immediately repair.
• Elevated ex-China regional premiums (Japan Q3 MJP ~$395, Europe ~$547.5, US Midwest ~110.5¢/lb); Guinea bauxite supply and rainy-season risk.
• Three down sessions in oil soften the inflation tail and lift Treasuries, lowering forced-tightening risk; China June exports +27%, PMI in expansion.

Bearish

• The dollar index back to ~101.50 (near the July-23 high) — broadly bearish for metals.
• A live July 29 FOMC (hike ~34.3%, hold ~65.7%) with the Warsh press conference the biggest near-term unknown; September is the consensus hike.
• The $3,200 hard cap unbroken on three attempts — upside is limited until a confirmed break on volume.
• De-escalation has cleared the supply-risk premium (Brent −8.7% Monday to $88.36, ~$87.83 Tuesday; strike pause, Oman-brokered Hormuz shipping talks) — last week’s rebound driver is gone.
• Alumina still sliding (SMM index ~2,720, futures ~2,710, four-market ~2,548) → cost support eroding; new Indonesian supply the Q3 pressure.
• Off-season demand: billet up two straight weeks to ~121 kt with fees at the cost line and July 14–20 withdrawals of 33 kt (−9.1 kt WoW, −19 kt YoY); processor operating rate ~61.3%; Q2 GDP +4.3% and property investment −18%.

8 · One-Sentence Market View

9 · Watchlist for Today’s Day & Night Sessions

1. LME 3M (Monday confirmed $3,171.00): can it hold MA10 (~$3,140) and mount a fourth run at the $3,200 hard cap? A loss of $3,140 opens $3,120.
2. SHFE AL2608 (est. ~23,150–23,300): whether the day/night session holds MA10 (~23,050)/22,900 and whether it can clear 23,300 — the night session must price the dollar’s pre-FOMC path in one move.
3. The July 29 FOMC (2:00pm ET decision, Warsh presser 2:30pm, no SEP): shifts in FedWatch’s ~65.7% hold / ~34.3% hike; a surprise hike or a hawkish presser would hit the dollar and metals first; Thursday’s Q2 GDP + June PCE follow.
4. Dollar index (~101.50): whether it defends 101.5 or slips back into the 100-handle around the decision — the most direct macro variable for metals near-term.
5. LME stocks & cancelled warrants: whether the 271,275 mt (July 24) print keeps falling, how the Russian share of the 245,350 mt on-warrant evolves, and whether nearby spreads (backwardation) widen — the core verification point for this bull case.
6. China inventory & spot: whether the next SMM ingot print breaks 1 Mt; whether the billet build widens and processing fees hold the cost line; whether East China’s basis (−20 to parity vs 08) and sentiment indices (shipment 3.08 / buying 3.16) extend their improvement; the Central China next-month-invoice pace.
7. Geopolitics & oil: progress in the US–Iran pause and the Oman-brokered Hormuz shipping talks, and whether Brent holds the $85–88 band; the actual repair pace at the Gulf’s two large smelters and their logistics — the real supply variable that outlives the premium.