3.31 SMM Morning Comment on Cast Aluminum Alloy
Futures: Overnight, the cast aluminum alloy 2605 contract price first fell and then rose, overall showing a fluctuate upward pattern. After the opening, the price quickly moved lower and touched an intraday low of 23,320 yuan/mt, then gradually stabilized and rebounded, fluctuating upward to a high of 23,610 yuan/mt. It pulled back slightly late in the session and finally closed at 23,585 yuan/mt, down 45 yuan/mt from the previous trading day, or 0.19%. Trading volume shrank significantly from the previous trading day, while open interest also declined, indicating strong wait-and-see sentiment among funds. Technically, the price rebounded to near the yellow line of the DKX indicator, while the KD indicator rose rapidly after a golden cross at low levels. Short-term rebound momentum was released, but the overall market remained in a sideways movement pattern.
Spot-Futures Price Spread Daily: According to SMM data, on March 30, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2605) narrowed to 1,150 yuan/mt.
Warrant Daily: SHFE data showed that as of March 30, the total registered volume of cast aluminum alloy warrants was 35,207 mt, down 1,477 mt from the previous trading day. Among them, the total registered volume in Shanghai was 2,152 mt, down 120 mt from the previous trading day; Guangdong 14,961 mt, down 787 mt; Jiangsu 2,946 mt, down 120 mt; Zhejiang 10,277 mt, down 450 mt; Chongqing 3,634 mt, up 0 mt; and Sichuan 1,237 mt, up 0 mt.
Industry Updates: SMM data showed that the PMI of the secondary aluminum industry in March rebounded sharply by 40.9 percentage points MoM to 68.8%, returning above the 50 mark. In March, enterprises basically resumed normal production, and downstream demand gradually recovered. Both production and new orders of secondary aluminum enterprises in March increased significantly from February. Looking ahead to April, secondary aluminum orders are expected to weaken, and the industry PMI may pull back below the 50 mark.
Aluminum Scrap: The US-Iran war disrupted aluminum fundamentals, and fund sentiment drove primary aluminum spot prices to surge by 720 yuan/mt yesterday from the previous trading day, with the aluminum scrap market generally following higher actively. The aluminum scrap market is expected to maintain a high-level consolidation pace this week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) running around 19,800-20,500 yuan/mt (excluding tax). Policy constraints on the supply side are unlikely to ease in the short term, and tight compliant cargoes, coupled with yards holding back cargoes, will continue to underpin prices. Demand side, the peak-season recovery fell short of expectations, downstream players showed strong wait-and-see sentiment amid high prices, lacked momentum for large-scale restocking, and just-in-time procurement remained the mainstream. Primary aluminum still faced fluctuations under the influence of geopolitical and macro factors, and the overall tug-of-war between sellers and buyers continued, warranting caution over the risk of wild swings in prices.
Silicon Metal: On March 30, according to SMM, east China non-oxygen blown #553 was unchanged from last Friday; oxygen-blown #553 was unchanged from last Friday; #521 was unchanged from last Friday; #441 was unchanged from last Friday; #421 was unchanged from last Friday; #421 for silicone was unchanged from last Friday; and #3303 was unchanged from last Friday. Individual silicon prices in Tianjin fell. Silicon prices in Huangpu Port, Shanghai, the northwest, Xinjiang, Kunming, and Sichuan held steady.
Markets Outside China: Affected by the attack and damage to EGA's Al Taweelah smelter in the UAE, expectations for overseas supply tightened again. LME aluminum opened sharply higher, driving overseas ADC12 quotes up quickly to $3,320-3,400/mt. Immediate import losses widened to above 2,000 yuan/mt, and the theoretical import window remained closed.
Summary: On Monday, ADC12 prices held up well, with mainstream producers generally raising quotes by 300-400 yuan/mt, mainly driven by stronger primary aluminum prices and rapidly rising aluminum scrap costs. Enterprises mostly increased quotes in line with the trend, and cost support was significant. However, demand remained relatively mediocre, downstream procurement was still cautious, inquiries and actual transactions were fairly average, and acceptance of high-priced cargoes was limited. The market as a whole showed a divergence of "clear cost-driven gains but weak demand follow-through." In the short term, if aluminum prices remain high, ADC12 prices may still find support, but upside room will be constrained by the pace of recovery in end-use demand.
[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.]
