3.17 SMM Morning Comment on Cast Aluminum Alloy
Futures: Overnight, the aluminum alloy 2604 contract bottomed out and fluctuated rangebound in a narrow range. After opening, it quickly fell to around 23,570 yuan/mt, then rebounded amid fluctuations, with a trading range of 23,570-23,715 yuan/mt, and closed at 23,710 yuan/mt late in the session, down 0.50% from the previous day's closing price. Intraday, it first dropped sharply and then staged a V-shaped rebound, before entering sideways consolidation, with a balanced tug-of-war between longs and shorts. Trading volume shrank, open interest edged up slightly, and market sentiment remained cautious.
Spot-Futures Price Spread Daily: According to SMM data, on March 16, 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 1,385 yuan/mt.
Warrant Daily: SHFE data showed that as of March 13, the total registered volume of cast aluminum alloy warrants was 53,440 mt, down 871 mt from the previous trading day. Among them, Shanghai registered 4,600 mt, down 180 mt from the previous trading day; Guangdong 19,092 mt, down 61 mt; Jiangsu 6,426 mt, down 150 mt; Zhejiang 17,670 mt, down 330 mt; Chongqing 4,114 mt, down 30 mt; and Sichuan 1,538 mt, down 120 mt.
Aluminum scrap: Continued fluctuations in geopolitical risks drove spot primary aluminum down 330 yuan/mt on Monday from the previous trading day, and the aluminum scrap market fell across the board. As for the price difference between A00 aluminum and aluminum scrap, on March 16, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,475 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,561 yuan/mt. Although it is now the traditional peak season, domestic aluminum scrap yards and downstream scrap utilization enterprises have maintained a lukewarm production pace due to weaker-than-expected recovery in end-user orders and wild swings in prices, and actual raw material restocking has fallen short of expectations. On the policy side, recycled enterprises lack clear expectations for the specific implementation rules of "reverse invoicing", and aluminum scrap circulation is set to tighten further. Primary aluminum will still be the core driver under the influence of the geopolitical situation, while price fluctuation risks are intensifying. On the supply side, cargo supply is being released steadily, but policy uncertainty continues to suppress circulation efficiency. On the demand side, the recovery pace in the peak season remains slow, while high prices and wild swings continue to curb purchase willingness. In the short term, close attention should be paid to primary aluminum trends amid progress in geopolitical conflicts, the recovery in downstream orders, and the implementation of recycling policies, while guarding against the risk of a sharp pullback from high levels.
Silicon metal: On March 16, according to SMM, east China non-oxygen blown #553 was unchanged MoM from the previous day; oxygen-blown #553 was unchanged MoM from the previous day; #521 was unchanged MoM from the previous day; #441 was unchanged MoM from the previous day; #421 was unchanged MoM from the previous day; #421 for silicone use was unchanged MoM from the previous day; and #3303 was unchanged MoM from the previous day. Silicon prices in Kunming, Sichuan, Xinjiang, Shanghai, Huangpu Port, Tianjin, and north-west China were steady.
Markets outside China: Overseas ADC12 quotations were around $3,400/mt, while domestic prices pulled back. Immediate import losses continued to widen to nearly 2,000 yuan, and the import window remained closed.
Summary: On Monday, quotations in the secondary aluminum alloy market were lowered by 100 yuan/mt overall. Affected by the pullback in futures, most enterprises lowered their quotations accordingly to align more closely with market transactions. However, as aluminum scrap raw material prices remained at a relatively high level, the cost side provided some support for ADC12 prices, and enterprises were generally restrained in the extent of their price adjustments. Demand side, downstream procurement still mainly focused on rigid demand, and no concentrated restocking driven by the price pullback had yet emerged. Wait-and-see sentiment in the market increased somewhat, and overall trading was relatively stable. In the short term, raw material costs remain high and provide strong support for ADC12 prices; but if prices continue to rise, the suppressive effect of high prices on end-use demand will also gradually emerge. Meanwhile, as the operating rate of secondary aluminum enterprises gradually recovers, there are expectations of a mild increase on the supply side. Overall, ADC12 prices are expected to continue to hover at highs in the short term. Going forward, close attention should be paid to the pace of downstream order releases, potential pressure from the progress of supply recovery, and the impact of changes in the Middle East situation on aluminum price trends.
[Data source statement: Apart from 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.]
