Supply-Demand Pattern of Weak Supply and Demand Is Unlikely to Change, Cast Aluminum Alloy Prices Are Expected to Remain in the Doldrums in the Short Term [SMM Cast Aluminum Alloy Morning Comment]

3.24 SMM Morning Comment on Cast Aluminum Alloy

Futures: Overnight, the most-traded cast aluminum alloy ad2605 contract closed at 22,750 yuan/mt, up 10 yuan/mt, or 0.04%, from the previous settlement. K=28.02, D=27.18, and J=29.7, with all three lines in the 20-30 range, indicating oversold territory and showing signs of turning upward, suggesting expectations for a short-term rebound. Lower volume and reduced open interest indicated that bears had somewhat exhausted their strength, but the rebound still needed higher volume for confirmation.

Spot-futures price spread daily: According to SMM data, on March 23, the theoretical spot premium of the SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2605) was 1,825 yuan/mt.

Warrant daily: SHFE data showed that as of March 23, the total registered warrant volume for cast aluminum alloy was 44,991 mt, down 2,741 mt from the previous trading day. By region, total registered volume was 3,177 mt in Shanghai, down 515 mt; 17,467 mt in Guangdong, down 453 mt; 5,022 mt in Jiangsu, down 453 mt; 14,155 mt in Zhejiang, down 1,079 mt; 3,843 mt in Chongqing, down 91 mt; and 1,327 mt in Sichuan, down 150 mt.

Aluminum scrap: On Monday, spot primary aluminum fell 630 yuan/mt from the previous trading day, and the aluminum scrap market generally followed lower. Some scrapyards or alloy plants in certain regions had already lowered aluminum scrap prices on Saturday, the 21st, in line with futures, and therefore made no further adjustments for the time being. Amid current wild swings in aluminum prices, scrapyards showed stronger willingness to hold back cargoes, highlighting the resilience of aluminum scrap prices, with cuts ranging from 100-400 yuan/mt. As for the price difference between A00 aluminum and aluminum scrap, on March 23, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,878 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,588 yuan/mt. The aluminum scrap market is expected to enter a weak consolidation phase this week, with the mainstream range for shredded aluminum tense scrap priced based on aluminum content at 19,800-20,500 yuan/mt (excluding tax). In the short term, close attention still needs to be paid to the impact of geopolitical conflicts on primary aluminum price fluctuations, the actual recovery of end-user orders, and the actual implementation progress of supply-side policies, with vigilance against the risk of wild swings in prices.

Silicon metal: On March 23, SMM east China non-oxygen blown #553 was raised by 50 yuan/mt from last Friday; oxygen-blown #553 was raised by 100 yuan/mt from last Friday; #521 was unchanged from last Friday; #441 was unchanged from last Friday; #421 was unchanged from last Friday; #421 for silicone use was unchanged from last Friday; and #3303 was unchanged from last Friday. Individual silicon prices in Huangpu Port, Tianjin, and Shanghai also increased. Silicon prices in the northwest, Xinjiang, Kunming, and Sichuan were unchanged.

Markets outside China: Current overseas ADC12 quotes pulled back to the $3,200-3,400/mt range, while immediate import losses remained around 2,000 yuan, leaving the theoretical import window closed.

Summary: Spot side, the secondary aluminum alloy ADC12 market continued to weaken yesterday, with mainstream enterprises generally cutting quotes by 200-400 yuan/mt. The weaker prices were mainly dragged down by a wider decline in aluminum prices and futures, with the cost center also moving lower; combined with previously strong bullish sentiment among some enterprises and a lagged pace of price adjustments, the market saw a compensatory decline today. Market sentiment, secondary aluminum enterprises turned cautious and bearish on short-term aluminum price trends, focusing on active shipments. Demand side support remained weak, with downstream procurement limited to rigid demand, strong wait-and-see sentiment, and no obvious increase in transactions. Overall, ADC12 prices were expected to remain in the doldrums in the short term.

[Data source statement: Except for public information, all other data was 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.]