Bears Added Positions, Aluminum Alloy Night Session Plunged; UAE Aluminum Scrap Export Ban Implemented [SMM Cast Aluminum Alloy Morning Comment]

Jun 25 SMM Secondary Cast Aluminum Alloy Morning Comment

Futures: Aluminum alloy futures weakened significantly during the overnight session, opening at 22,850 yuan/mt in the night session and closing at 22,720 yuan/mt, down 390 yuan/mt, or 1.69%. Prices briefly surged after the open but remained under pressure throughout the session, hovering at lows below the average price line, before edging slightly higher near the close, though still locked in a weak pattern. The 4-hour candlestick formed a large bearish bar, confirming a clear retreat from the prior high of 23,655 yuan/mt. The DKX indicator’s two lines turned downward, the KD indicator fell into the low zone, trading volume expanded to 5,474, and open interest edged up by 72 lots. The increase in positions amid the decline reflected bears releasing sentiment, while the RSI indicator moved in a retreat-from-highs zone, showing bulls exhausting.

Spot-Futures Price Spread Daily: According to SMM data, the theoretical premium of SMM ADC12 spot price over the closing price of the most-traded secondary cast aluminum alloy futures contract (AD2608) at 10:15 was 855 yuan/mt on Jun 24.

Warrant Daily: SHFE data showed total registered warrants for secondary cast aluminum alloy stood at 33,243 mt on Jun 24, down 453 mt from the previous trading day.

Industry Dynamics: According to Ministerial Decree No. 105 of 2026 issued by the UAE Ministry of Trade, the UAE formally enacted and implemented a 4-month temporary ban on the export of solid scrap and scrap metal on Jun 3, 2026, covering ferrous scrap, aluminum scrap, and certain copper shredded scrap. The affected aluminum scrap involves multiple tariff codes under heading 7602. The document states the ban takes effect 7 business days after issuance for a 4-month term, while goods under signed international contracts can apply for exemptions from the competent authority. The UAE previously levied a 100 dirham/mt ($27/mt) export fee on aluminum scrap. This measure further reflects its direction of keeping raw materials within the country to boost domestic processing value-added. Since the UAE’s scrap is mainly exported to markets in Asia such as India and South Korea, it is expected to have some impact on regional aluminum scrap flows.

Aluminum Scrap: SMM A00 price slumped 330 yuan/mt WoW to 23,470 yuan/mt yesterday, dragging aluminum scrap markets lower. However, cost support proved significant, limiting the decline. On the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan stood at 2,184 yuan/mt on Jun 24, while the price difference between A00 aluminum and shredded aluminum tense scrap was 1,533 yuan/mt. Enterprise tax cost rose over 2% YoY, and the narrowing scrap spreads reflected strong bottom-side support for aluminum scrap. Aluminum scrap markets are expected to remain in the doldrums at relatively high levels. The tight supply of tax-compliant invoiced cargo persists, and expanding production cuts and shutdowns are fueling stronger expectations of aluminum scrap supply contraction, providing a floor for prices. Demand side, orders at downstream secondary cast aluminum alloy plants remain sluggish, while purchase support from wrought aluminum alloy mills has also weakened, with little real improvement in end-use consumption. The aluminum scrap market’s double weakness in supply-demand is unlikely to reverse in the near term.

Silicon Metal: On Wednesday, SMM oxygen-blown #553 silicon in east China was at 9,100-9,200 yuan/mt, and #441 silicon was at 9,300-9,400 yuan/mt. Silicon metal prices continued to move sideways within a narrow range, with no new news-driven disruptions in markets recently, leaving silicon metal prices in a stagnant stalemate. Supply increase is putting prices under pressure in the short term.

Markets Outside China: Offers for imported ADC12 continued to pull back to $3,250-3,350/mt, with per-mt immediate import losses narrowing to around 2,434 yuan, easing the import price inversion, though the theoretical import window remains closed.

Summary: On Wednesday, ADC12 market quotes were generally lower. SMM ADC12 dropped 100 yuan/mt MoM to 24,000 yuan/mt. The recent persistent weakness in SHFE aluminum and secondary cast aluminum alloy futures has triggered some loosening in aluminum scrap prices, with cost side pressure easing slightly from earlier levels and providing room for price cuts. However, the tax invoice issue in aluminum scrap markets remains unimproved, making procurement of compliant raw materials difficult and keeping enterprises’ actual production costs at a relatively high level, which provides some support for ADC12 prices. Downstream demand continues to show off-season characteristics, with purchases dominated by rigid restocking and mediocre trading. In the near term, ADC12 prices will continue to fluctuate narrowly downward.

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