On October 28, 2026, in the derivatives market, aluminum futures on the Shanghai Futures Exchange showed slight volatility. The most-traded aluminum contract increased by 0.28% by the end of Wednesday's daytime trading and fell by 0.98% overnight, closing the nighttime session at Yuan 23,355/tonne as of 1 a.m. Thursday, October 29, 2026.
Geopolitically, Iran's foreign minister is pushing to implement the "7-Day Plan" within a week, aiming to secure sanctions relief and safe passage through the Strait of Hormuz. Progress on this front would accelerate the unwinding of the Gulf supply disruption and shipping risk premiums that had been priced into aluminum prices, exerting short-term downward pressure. However, should negotiations break down or tensions flare up again, this risk premium would quickly be repriced.
On the macro side, the Federal Reserve held rates steady in October, but internal divisions were evident--Cook and Hammack advocated for a 25bp hike, while the statement emphasized solid economic momentum and the need to accumulate more information. Warsh noted that financial conditions have tightened but stopped short of calling them restrictive, leaving the overall tone tilted hawkish, with the probability of a December rate hike still elevated. This means the dollar and U.S. Treasury yields are likely to remain firm to stronger, keeping a lid on valuations across base metals.
On October 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 23,930/tonne, up Yuan 40/tonne from the previous day; in South China Yuan 23,910/tonne, up Yuan 30/tonne from the previous day; and in Central Plains Yuan 23,730/tonne, up Yuan 20/tonne from the previous day.
SHFE aluminum edged higher before retreating in early trading yesterday. The East China market remained subdued, with inventories flat and showing little change. Although the monthly spread narrowed sharply, the relatively elevated aluminum prices and basis led to strong market expectations of a price correction ahead. Holders continued to offload positions aggressively, while downstream fabricators purchased only as needed, with procurement momentum weakening compared to before. Middlemen showed cautious entry appetite, resulting in overall sluggish trading and thin turnover.
In the South China market, traders sold spot cargoes while buying on the futures curve, betting on a narrowing basis. Spot circulation relatively loose, and downstream end-users replenished inventories mainly on a need-to basis, with overall transaction activity mediocre.
In summary, Iran's diplomatic push weakens supply disruption expectations, while the Fed's rate pause preserves the option of further tightening. In the near term, aluminum prices are more likely to consolidate at high levels in a pattern of "geopolitical premium retreat plus macro ceiling cap," with upside room constrained and the downside cushioned by low inventories.
