The market has entered holiday mode, with prices remaining stable overall, awaiting recovery post-holiday. [SMM Cast Aluminum Alloy Morning Comment]

2.13 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded aluminum alloy 2604 contract opened at 22,305 yuan/mt overnight, with a high of 22,385 yuan/mt, a low of 22,085 yuan/mt, and closed at 22,140 yuan/mt, down slightly by 0.54%.

Spot-Futures Price Spread Report: According to SMM data, on February 12, the theoretical premium of the SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy contract (AD2604) at 10:15 was 1,490 yuan/mt.

Warrant Report: SHFE data showed that on February 12, the total registered volume of cast aluminum alloy warrants was 66,638 mt, a decrease of 210 mt from the previous trading day. The breakdown by region is as follows: Shanghai (6,490 mt, unchanged MoM), Guangdong (23,181 mt, down 60 mt MoM), Jiangsu (8,681 mt, down 150 mt MoM), Zhejiang (22,249 mt, unchanged MoM), Chongqing (4,684 mt, unchanged MoM), and Sichuan (1,353 mt, unchanged MoM).

Aluminum Scrap: Aluminum scrap yards and scrap utilization enterprises gradually entered the Chinese New Year holiday this week. Shipment activities from yards were suspended, with only a small amount of delayed arrivals being slightly stocked. Market trading became sluggish and is unlikely to improve in the short term. Aluminum scrap prices are expected to hover at highs after the holiday, as downstream demand is not expected to recover immediately. The mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) is still expected to be around 19,000-19,800 yuan/mt (excluding tax). In the first week after the holiday, scrap yards and aluminum processing enterprises are not expected to fully resume operations, limiting the output of new scrap and the recovery of old scrap, leading to tight market supply. Coupled with high aluminum prices, this provides bottom support for aluminum scrap prices. Downstream demand declined compared to January, and trading is expected to remain sluggish in the short term, with the weak supply-demand pattern continuing. Transactions will mainly consist of essential restocking. Close attention should be paid to the resumption pace of downstream processing enterprises after the holiday, and be alert to the possibility that post-holiday resumption expectations could reignite market capital sentiment, further pushing up aluminum prices and keeping the aluminum scrap market trading atmosphere sluggish.

Silicon Metal: On February 12, SMM prices in east China were as follows: non-oxygen blown #553 (9,100-9,300 yuan/mt), oxygen-blown #553 (9,200-9,400 yuan/mt), #521 (9,300-9,500 yuan/mt), #441 (9,300-9,600 yuan/mt), #421 (9,500-9,800 yuan/mt), #421 for silicone use (9,800-10,200 yuan/mt), and #3303 (10,200-10,400 yuan/mt). Prices in Kunming, Huangpu Port, Tianjin, Northwest China, Shanghai, Xinjiang, and Sichuan remained stable.

Overseas Market: For imports, overseas ADC12 offers remained in the range of $2,840-2,900/mt, with the import profit margin rebounding to near the break-even line.

Summary: As upstream and downstream enterprises in the industry chain successively enter holiday mode, although there are still quotations in the spot market, actual transactions have significantly decreased, market liquidity has cooled rapidly, and prices are primarily focused on maintaining stability before the holiday. After the holiday, price trends will return to the interplay between supply-demand dynamics and costs. If enterprises maintain a normal pace of production resumptions while downstream order recovery falls short of expectations, the price center risks facing downward pressure; if phased restocking occurs after the holiday, coupled with primary aluminum holding up well, ADC12 prices are expected to see a corrective rebound. Overall, before end-use demand shows substantial improvement, the market is likely to maintain a fluctuating trend in the initial post-holiday period, with prices still moving within the pre-holiday range, and the direction of movement depends on the strength of demand recovery and the performance of primary aluminum prices.

[Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, and are for reference only, not constituting decision-making advice.]