Overseas Aluminum Supply Disruptions Continued, and Cast Aluminum Alloy Futures Surged Sharply Overnight [SMM Cast Aluminum Alloy Morning Comment]

3.5 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the aluminum alloy 2604 contract opened higher with a gap at 23,800 yuan/mt in the night session. After a rapid rise early in the session, it hovered at highs, then dropped back slightly and consolidated, closing at 23,670 yuan, up 1.15% from the previous close. Futures held up well, with the price center moving up notably. Open interest increased slightly, and bullish sentiment was positive.

Spot-Futures Price Spread Daily: According to SMM data, on March 4, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2604) was 1,200 yuan/mt.

Warrant Daily: SHFE data showed that on March 4, total registered cast aluminum alloy warrants were 62,228 mt, down 1,114 mt from the previous trading day. Of this, Shanghai totaled 5,949 mt, down 121 mt; Guangdong totaled 20,908 mt, down 181 mt; Jiangsu totaled 7,930 mt, down 150 mt; Zhejiang totaled 20,740 mt, down 422 mt; Chongqing totaled 4,384 mt, down 150 mt; and Sichuan totaled 1,203 mt, down 90 mt.

Aluminum scrap: Yesterday, spot primary aluminum rose 440 yuan/mt MoM from the previous trading day, and the aluminum scrap market actively followed the gains, though there was still slight divergence across regions. Shanghai, Zhejiang, and other areas saw larger follow-up increases, while Henan, Guizhou, and other areas adjusted prices more cautiously. The aluminum scrap market was expected to fluctuate at highs this week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) running around 19,000-19,800 yuan/mt (tax excluded). Supply side, yards had basically fully resumed operations, and supply release was set to increase, but constraints from recycling policies on circulation remained. Demand side, downstream enterprises accelerated their resumption pace, and restocking demand was expected to be released slowly. Overall, the tug-of-war between sellers and buyers continued. Market trading activity was set to recover gradually but remain sluggish. Close attention should be paid to downstream resumption progress, primary aluminum price trends, and changes in recycling policies, and beware of price fluctuation risks.

Silicon metal: On March 4, SMM east China non-oxygen blown #553 fell 50 yuan/mt from the previous day; oxygen-blown #553 fell 50 yuan/mt; 521# fell 50 yuan/mt; 441# fell 50 yuan/mt; 421# fell 50 yuan/mt; 421# for silicone use was unchanged; and 3303# was unchanged. Some silicon prices in Kunming, Huangpu Port, Tianjin, Northwest China, Sichuan, Shanghai, and Xinjiang also declined.

Overseas market: Overseas ADC12 quotes surged to $3,100-3,150/mt, while domestic prices rose less, and the immediate import loss widened rapidly to around 1,000 yuan.

Summary: On Wednesday, ADC12 prices continued to rise, with mainstream quotations raised by 100–300 yuan/mt, driven by a rapid upswing in raw material costs. Market pricing sentiment showed slight divergence: some enterprises, supported by costs, actively followed the rally, with increases of 200–300 yuan/mt; others believed this round of gains was more macro-driven with insufficient fundamental support, and that prices face pullback risks, thus cautiously following with a 100 yuan/mt increase while staying on the sidelines. On the demand side, although a steady rebound was seen, the overall recovery remained limited; downstream buyers still mainly purchased as needed, and weak demand imposed some restraint on upside room for prices. In the short term, ADC12 is expected to hold up well: escalating geopolitical conflict in the Middle East has put aluminum capacity in Qatar, Bahrain, and Mozambique at risk of shutdowns, and overseas supply disruptions are supporting futures; domestically, the pace of production resumptions is relatively slow and supply release is sluggish, and together with cost support, downside room for prices is limited. Going forward, market focus will shift to the realization of end-use consumption: if end-user orders increase materially and primary aluminum remains strong, the price center is expected to move higher; if demand recovery falls short of expectations, consolidation will likely dominate.

[Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and SMM’s internal database models, and are for reference only and do not constitute decision-making advice.]