Rising Geopolitical Risks in the Middle East, ADC12 to Hold Up Well in the Short Term [SMM Cast Aluminum Alloy Morning Comment]

3.3 SMM Morning Comment on Cast Aluminum Alloy

Futures: Last Friday’s night session, the most-traded cast aluminum alloy 2605 contract opened lower and closed higher, holding up well. It opened at 22,867 yuan/mt, then fluctuated upward, hitting an intraday high of 23,175 yuan/mt and a low of 22,835 yuan/mt, and finally closed at 23,105 yuan/mt, up 145 yuan from the previous trading day, or 0.63. Trading volume was 2,121 lots, and open interest decreased by 468 lots to 10,183 lots. Technically, the daily chart formed a small bullish candlestick and held above short-term moving averages, while the KD indicator turned upward from low levels, showing that short-term rebound momentum had been released to some extent, though prices still faced resistance from previous highs above.

Spot-Futures Price Spread Daily: According to SMM data, on March 27, the SMM ADC12 spot price theoretically carried a premium of 1,435 yuan/mt over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2605).

Warrant Daily: SHFE data showed that on March 27, the total registered volume of cast aluminum alloy warrants was 36,684 mt, down 2,351 mt from the previous trading day. Among them, total registered volume in Shanghai was 2,272 mt, down 152 mt from the previous trading day; Guangdong 15,748 mt, down 452 mt; Jiangsu 3,066 mt, down 332 mt; Zhejiang 10,727 mt, down 1,415 mt; Chongqing 3,634 mt, up 0 mt; and Sichuan 1,237 mt, up 0 mt.

Silicon metal: (1) Last week, spot silicon metal prices remained in a stalemate. SMM east China oxygen-blown #553 silicon was at 9,100-9,300 yuan/mt, and #441 silicon was at 9,300-9,500 yuan/mt. Market sentiment cooled slightly, and futures prices pulled back slightly on Friday to around 8,600 yuan/mt. Silicon metal had limited upside and downside room. Demand side, operating rates were largely stable, and attention should be paid to whether there will be any changes on the supply side. (2) Social inventory: According to SMM statistics, as of March 26, social inventory of silicon metal in major regions totaled 560,000 mt, up 7,000 mt WoW, with the increase mainly coming from Xinjiang. (Excluding Inner Mongolia, Ningxia, Gansu, and other regions).

Markets outside China: Current overseas ADC12 quotations remained in the range of $3,220-3,260/mt, and immediate import losses continued at around 2,000 yuan, indicating that the theoretical import window remained closed.

Summary: Last Friday, the ADC12 market posted a slight follow-up gain driven by the rebound in aluminum prices. Some enterprises raised quotations by 100-200 yuan/mt due to higher costs, while others chose to temporarily hold prices steady and wait on the sidelines because of the pace of previous price adjustments or weak demand. In terms of transactions, downstream procurement was still mainly based on rigid demand, and the overall trading atmosphere in the market did not improve significantly, indicating insufficient demand-driven momentum. On the macro front, the Taweelah complex of Emirates Global Aluminium (EGA) in the UAE suffered severe damage in missile and drone attacks from Iran. Under macro disruptions, ADC12 prices are expected to continue fluctuating upward in the short term. Going forward, close attention should be paid to the impact of developments in the Middle East on aluminum prices and the pace of downstream consumption recovery.

[Data Source Disclaimer: Except for public information, all other data is processed and derived by SMM based on public information, market communication, and SMM’s internal database models, and is for reference only and does not constitute decision-making advice.]