Cost and Demand Dual Pressure, ADC12 Quotation Center Shifts Down [SMM Cast Aluminum Alloy Morning Comment]

7.14 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the most-traded cast aluminum alloy 2609 contract closed at 22,825, up 15 points or 0.07%. Trading volume stood at 3,085 lots, down 3,601 MoM, indicating a significant cooling of trading activity. Open interest declined 61 MoM to 19,344 lots, as longs and shorts trimmed positions slightly to exit. The sharp contraction in trading volume and thick wait-and-see sentiment suggest a one-sided trend is unlikely in the near term, with sideways movement highly probable.

Spot-Futures Price Spread Daily: According to SMM data, on July 13, SMM ADC12 spot prices quoted a theoretical premium of 1,135 yuan/mt against the 10:15 am closing price of the most-traded cast aluminum alloy contract (AD2609).

Warrant Daily: SHFE data shows that on July 13, total registered cast aluminum alloy warrants stood at 21,523 mt, a decrease of 689 mt from the previous trading day. By region, total registered warrants were 2,096 mt in Shanghai (down 61 mt), 2,785 mt in Guangdong (down 329 mt), 4,407 mt in Jiangsu (flat), 7,212 mt in Zhejiang (down 239 mt), 4,238 mt in Chongqing (down 60 mt), and 785 mt in Sichuan (flat).

Aluminum Scrap: Yesterday, SMM A00 spot aluminum prices closed at 23,000 yuan/mt, down 120 yuan/mt MoM from the previous trading day. The aluminum scrap market largely followed the decline, though prices for some categories in certain regions remained stable amid a wait-and-see stance. The scrap market is expected to continue consolidating on a subdued note, but downside room is limited. The mainstream price range for shredded aluminum tense scrap, priced based on aluminum content, is expected to trade at 19,200–19,800 yuan/mt (excluding tax). The price difference between A00 aluminum and aluminum scrap has narrowed to a historical low, significantly eroding the cost advantage of scrap over primary aluminum. If aluminum prices continue to decline, the substitution effect will accelerate its emergence.

Silicon Metal: On July 13, in east China, SMM non-oxygen blown #553 prices were raised by 50 yuan/mt; oxygen-blown #553 was raised by 50 yuan/mt; #521 held steady; #441 held steady; #421 held steady; #421 for silicone use held steady; and #3303 held steady. Some silicon prices in Tianjin and Shanghai were raised. Silicon prices in Kunming, Northwest China, Sichuan, Huangpu Port, South China, and Xinjiang held steady.

Markets Outside China: On the import front, overseas ADC12 quotes were in the $3,100–$3,200/mt range, with the price spread between Chinese and overseas markets continuing to repair. If overseas quotes continue to pull back, the import profit window is expected to gradually open, at which point increased import resources will provide some supplement to China's tight domestic supply.

Summary: Yesterday, quotes in the ADC12 market generally consolidated on a subdued note, with SMM ADC12 prices sliding 100 yuan/mt from the previous trading day. The pullback in aluminum prices and weakening of cast aluminum alloy futures dampened market sentiment, and enterprise price levels shifted lower along with the cost side. Meanwhile, downstream demand continued to fade, creating a tepid trading atmosphere that further eroded enterprises' willingness to hold prices firm. Overall, with cost support softening and off-season demand characteristics becoming more evident, the ADC12 market is expected to trade in a weak, sideways pattern in the near term.

[Data source statement: All data other than public information is processed by SMM based on public information, market communication, and SMM's internal database models, for reference only and does not constitute decision-making advice.]