On August 20, 2026, in the derivatives market, aluminum futures on the Shanghai Futures Exchange showed slight volatility. The most-traded aluminum contract for October delivery dropped by 0.61% by the end of Thursday's daytime trading and decreased by 0.47% overnight, closing the nighttime session at Yuan 23,520/tonne as of 1 a.m. Friday, August 21, 2026.
The relief from the U.S. Treasury's expanded long-bond buyback proved short-lived, with the 30-year Treasury yield rebounding to 5.26%. Coupled with Musalem's hawkish remark that "raising rates now could help avoid more aggressive action later," this signals structurally higher long-end rates and a revived potential for rate hikes, keeping the dollar and real yields biased to the upside-net bearish for aluminum prices.
On the financial side, it caps valuation recovery room for SHFE and LME aluminum, while weighing on overseas financing costs and forward manufacturing demand expectations. That said, Daly's "no evidence yet for preemptive hikes" tempers the tightening fear, and domestic aluminum ingot traders' inventory drawdowns, low LME stocks, and slower-than-expected Middle East restarts provide a floor. Aluminum is unlikely to fall sharply near term; the macro headwind offsets the rebound window the Treasury buyback briefly opened, leaving prices oscillating with a soft bias, capped above by the long-end yield rebound and supported below by tight inventories.
On August 20, 2026, Mysteel's daily price assessment showed that the market price for A00 aluminum with a minimum purity of 99.7% in China was Yuan 23,600/tonne, down Yuan 70/tonne from the previous day; in South China Yuan 23,710/tonne, down Yuan 80/tonne from the previous day; and in Central Plains Yuan 23,530/tonne, down Yuan 60/tonne from the previous day.
On the fundamental side, under macro headwinds, aluminum prices extended a mild decline. As prices pulled back, downstream demand gradually unlocked, traders stepped in to absorb cheaper spot material for contract fulfillment, and traders' inventories maintained a steep drawdown slope. Fundamentals are providing a tangible offset to the macro drag: the price dip triggered restocking by end-users on rigid demand and low-price procurement by traders to cover contracts. With the molten-aluminum-to-product ratio staying elevated, tradable ingot supply continues to tighten, further reinforcing the spot floor. Overall, macro factors cap the upside for aluminum prices, while fundamental resilience limits the downside.
SHFE aluminum edged lower in weak, rangebound trade through yesterday's morning session. In the East China spot market, performance was soft but stable: as prices fell consecutively and concentrated inbound arrivals thinned, some holders firmed offers at the open, but as the basis strengthened, hedged material began to flow out - those sellers grew more eager to cash out, with quotes drifting from around the average price down to a Yuan 10/tonne discount, turning spot supply looser. Downstream restocking demand stayed reasonably resilient, yet traders buying sentiment stayed cautious, so overall deals were mostly need-based.
In South China, the basis versus the front-month contract held near a Yuan 100/tonne premium; absolute prices ticked lower again, but spot traders actively offloaded into the high basis, leaving spot circulation ample. With the long-contract delivery window nearing, traders took what they needed to fulfill longs, and end-users bought on rigid demand, overall turnover was fair.
In conclusion, aluminum prices face a tug-of-war between macro headwinds and fundamental resilience. With the macro bearish bias offset by tangible spot strength, SHFE aluminum is expected to remain range-bound with a soft bias in the near term.
