Prices Pulled Back, Aluminum Scrap Holders Reluctant to Sell; Overall Market Transactions Were Muted [SMM Cast Aluminum Alloy Morning Comment]

3.9 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the most-traded aluminum alloy 2604 contract closed at 23,765 yuan/mt, up 485 yuan from the previous trading day’s settlement price, a gain of 2.08%. It opened at 23,360 yuan/mt, with a high of 23,975 yuan/mt and a low of 23,355 yuan/mt. Trading volume was 6,680 lots (+3,555), and open interest was 6,242 lots (+215), showing a bullish pattern of rising volume and prices alongside increasing open interest. After rebounding from the low of 21,875 yuan/mt, prices formed a clear upward channel. Despite a recent pullback, prices did not break below key support levels, and the overall bullish trend remained unchanged. After the KDJ lines formed a golden cross, they diverged upward, indicating that short-term bullish momentum persisted; the VR indicator stayed in the healthy range of 100-150, suggesting active fund participation.

Spot-Futures Price Spread Daily: According to SMM data, on March 6, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the cast aluminum alloy most-traded contract (AD2604) was 1,145 yuan/mt.

Warrant Daily: SHFE data showed that on March 6, the total registered volume of cast aluminum alloy warrants was 58,729 mt, down 1,453 mt from the previous trading day. By region: Shanghai 5,618 mt (-91 mt); Guangdong 20,300 mt (-579 mt); Jiangsu 7,477 mt (-241 mt); Zhejiang 19,958 mt (-391 mt); Chongqing 4,294 mt (-60 mt); Sichuan 1,082 mt (-91 mt).

Aluminum scrap: Geopolitical tailwinds continued to fluctuate, driving spot primary aluminum to fall back 670 yuan/mt WoW from the previous trading day last Friday, and the aluminum scrap market fell in tandem. In terms of the price difference between A00 aluminum and aluminum scrap, on March 6, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,418 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,611 yuan/mt. The aluminum scrap market was expected to hold up well at elevated levels this week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) hovering between 20,300-20,900 yuan/mt (tax excluded). Post-holiday production order gradually recovered, and the release of supply further eased, but downstream processing enterprises saw a slow pace of order recovery. Overall transactions were expected to remain sluggish, and the tug-of-war between sellers and buyers in the supply-demand landscape was set to intensify in the short term. Close attention should be paid to the impact of the US-Iran conflict on primary aluminum supply and transportation, downstream work-resumption progress, and changes in recycling policies, while staying alert to heightened price fluctuation risks.

Silicon metal: Last week, silicon metal prices fell first and then rose. SMM east China oxygen-blown #553 silicon was at 9,000-9,200 yuan/mt, and #441 silicon was at 9,200-9,500 yuan/mt. Futures prices recovered on the back of policy and news developments, and silicon suppliers’ quote center edged up slightly from earlier levels. Demand reflected routine post–Chinese New Year work and production resumptions, with downstream purchases made on an as-needed basis.

Overseas market: On the import side, driven by a sharp rise in LME aluminum prices and stronger overseas demand, overseas ADC12 offers climbed to around $3,200/mt, while the increase in domestic prices was relatively limited, and the import window quickly turned loss-making.

Summary: Overall ADC12 market offers were lowered, mostly by 200-400 yuan/mt. The price adjustments were mainly driven by a downward shift in the cost center and weaker downstream purchasing. However, amid the price pullback, aluminum scrap traders’ reluctance to sell became more pronounced, leaving limited room for raw material costs to pull back; enterprises were generally cautious in adjusting prices, and most producers still held bullish expectations for the market outlook. In the short term, supported by costs and against a backdrop of mild supply release, ADC12 prices are expected to hold up well. The medium-term trend will still depend on the recovery in end-use consumption. If die-casting industry orders increase significantly, the price center is expected to move further higher; if demand recovery falls short of expectations, coupled with a continued rise in operating rates on the supply side, prices will shift from elevated levels into rangebound consolidation.

[Data source statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and SMM’s internal database models, for reference only and not constituting decision-making advice.]