On August 28, 2026, in the derivatives market, aluminum futures on the Shanghai Futures Exchange showed slight volatility. The most-traded aluminum contract for October delivery rose by 0.36% by the end of Friday's daytime trading but decreased by 0.02% overnight, closing the nighttime session at Yuan 23,925/tonne as of 1 a.m. Monday, August 31, 2026.
This macro backdrop presents a "macro headwinds, fundamentals support" pattern of bearish consolidation for aluminum prices: Waller's hawkish stance emphasizing that inflation data shows no significant improvement in trend, financial conditions cannot be described as restrictive, and the probability of a rate hike in September is higher than holding rates steady, which will push up U.S. Treasury yields and the dollar, weighing on dollar-denominated LME aluminum. At the same time, the "higher-for-longer" rate expectations downgrade global aluminum demand from real estate, automotive, solar, and packaging sectors.
Although the preliminary benchmark revision of U.S. 2026 non-farm payrolls came in at -79,000, far below the market expectation of +183,000, which should have signaled economic weakness and reduced the necessity for rate hikes. Under the prevailing narrative of "sticky inflation and Fed hawkishness," it reads more like a stagflationary signal: weaker demand but no imminent rate cuts, thus offering only a weak tailwind for aluminum that cannot offset the hawkish pricing. Overseas aluminum is more visibly pressured by the dollar and Treasury yields, leaning bearish in the near term; the SHFE aluminum contract, however, is underpinned by the domestic smelting capacity cap, low inventories, and new energy-related aluminum demand, preventing it from following overseas declines entirely.
On August 28, 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 23,900/tonne, down Yuan 20/tonne from the previous day; in South China Yuan 24,110/tonne, down Yuan 50/tonne from the previous day; and in Central Plains Yuan 23,780/tonne, down Yuan 40/tonne from the previous day.
Fundamentally, destocking continues through the off-season, breaking seasonal patterns, and expectations for the "Golden September, Silver October" peak season are rising. However, overseas restarts are accelerating, with new capacity from the UAE's Al Taweelah and Indonesia capping upside potential. A strong dollar and increased overseas supply weigh on aluminum prices from above, but destocking on the fundamental side provides support, keeping aluminum prices in a consolidation pattern.
Last Friday's early session saw SHFE aluminum edge lower in a narrow range. Traders' inventories in the Central China market dipped slightly, holding around 160,000 tonnes. As the basis continued to widen, traders were eager to sell and cash out, keeping spot supply relatively ample. The modest price dip prompted downstream enterprises to restock moderately on Friday, sustaining demand releases. Traders stepped in to source discounted, lower-priced material and fulfilled orders as needed. Overall trading was mediocre.
In South China, early Friday morning saw offers predominantly at par for next-month invoices, but no spot deals were concluded. By mid-session, mainstream offers were adjusted down to a 10-yuan discount, with a few still holding at par; spot transactions remained difficult. In the latter part of the session, spot trading stayed lackluster. With the basis running high, futures-spot arbitrageurs were active sellers, but traders remained cautious on taking deliveries, while end-user factories mostly restocked on a need-to basis. Overall trading was mediocre.
Overall, aluminum prices are caught in a tug-of-war: a strong dollar and Fed hawkishness cap the upside, while off-season destocking and peak-season expectations provide a floor. SHFE aluminum is likely to stay range-bound in the near term, taking cues from upcoming U.S. inflation data and September FOMC signals.
