6.26 SMM Cast Aluminum Alloy Morning Comment
Futures: The most-traded AD2608 contract moved sideways in the doldrums during the night session, opening at 22,630 yuan/mt, with the session’s high at 22,735 yuan/mt, low at 22,555 yuan/mt, and closing at 22,580 yuan/mt, down 100 yuan/mt, or 0.44%, from the previous trading day. After a brief early-session uptick, prices remained under sustained pressure, trading below the average price line for most of the session, with weak rebound momentum, and held at lows into the close. The 4-hour candlestick chart extended a pattern of consecutive bearish candles pulling back, with the DKX lines pointing downward, the KD indicator at lows, and an RSI reading of just 16.38, entering oversold territory, suggesting a need for minor short-term correction. Night session trading volume was 4,994 lots, while open interest dropped sharply by 1,458 lots, indicating bears were closing positions to take profits. Resistance formed at 22,735 yuan/mt in the near term, and support at 22,555 yuan/mt, with the overall pace of decline slowing, though the weak consolidation pattern remained unchanged.
Spot-Futures Price Spread Daily: According to SMM data, the theoretical premium of SMM ADC12 spot prices over the closing price of the most-traded cast aluminum alloy contract (AD2608) at 10:15 AM on June 25 widened to 1,270 yuan/mt.
Warrant Daily: SHFE data showed that total registered cast aluminum alloy warrants stood at 33,203 mt on June 25, down 40 mt from the previous trading day.
Social Inventory: This week, social inventory of secondary aluminum alloy ingots in China fell by 2,800 mt WoW to 50,400 mt, marking a fourth consecutive week of destocking and a further decline in inventory levels. Supply side, since June, the operating rates of secondary aluminum enterprises have been slipping due to tighter tax invoices, restricted procurement of compliant raw materials, and weakening end-use demand, leading to restrained production releases and a corresponding decline in new warehouse inflows. Demand side, the recent accelerated decline in aluminum alloy futures prices has boosted some downstream dip-buying interest and mills’ willingness to repurchase, quickening the pace of warehouse withdrawals. Further downside room for inventory remains in the short term.
Aluminum Scrap: Yesterday, SMM A00 spot aluminum prices closed at 22,850 yuan/mt, plunging 620 yuan/mt WoW from the previous trading day. The aluminum scrap market moved lower in tandem, but with notable cost support, the decline was limited. On scrap spreads, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan stood at 2,137 yuan/mt on June 25, while the spread between A00 aluminum and shredded aluminum tense scrap was 1,160 yuan/mt. Next week, the aluminum scrap market is expected to remain in the doldrums with consolidation at highs, but with limited downside room. Shredded aluminum tense scrap (priced based on aluminum content) is expected to trade mostly in a tax-excluded range of 19,300–19,900 yuan/mt. The constraints of the reverse-invoicing policy and the lagged contraction in imported aluminum scrap continue to form a bottom for the market, but off-season demand weakness and low downstream operating rates are capping upside room. Attention should be paid to the pace of policy compliance, progress in US-Iran talks and navigation through the Strait of Hormuz, the arrival pace of overseas aluminum scrap, and changes in downstream operating rates in China.
Silicon Metal: Yesterday, SMM oxygen-blown #553 silicon in east China traded at 9,000-9,200 yuan/mt, and #441 silicon at 9,200-9,400 yuan/mt, with the price center trending slightly weaker WoW. In the futures market, the most-traded contract fluctuated around 8,450-8,550 yuan/mt this week. Supply-demand balance, the increase on the supply side for silicon metal exceeded that on the demand side, June-July. Combined with a lack of recent positive news to boost sentiment, upward drivers for the silicon metal market remain insufficient, while cost support below limits the downside room. Prices have been in the doldrums recently with narrow, weak fluctuations.
Markets Outside China: Imported ADC12 offers continued to pull back to $3,200–$3,300/mt, and immediate import losses per ton narrowed to around 2,305 yuan, easing the price inversion, though the theoretical import window remains closed.
Summary: On Thursday, mainstream enterprise quotes for ADC12 were broadly revised down by 100–200 yuan/mt, with SMM ADC12 prices falling 150 yuan/mt from the previous day to 23,850 yuan/mt. Under the continuous falling prices, downstream client purchasing enthusiasm did not pick up notably, with buyers still making mainly just-in-time procurement, a thick wait-and-see sentiment, and insufficient restocking willingness. Meanwhile, aluminum scrap prices held relatively firm, particularly with compliant raw material supply remaining tight. The price decline further squeezed scrap suppliers' margins, increasing their reluctance to sell and affecting raw material circulation to some extent. Under the ongoing constraints of the "reverse invoicing" policy, cost pressure from industry compliance has yet to ease, and enterprises still face substantial production and operational pressure. The short-term market will remain dominated by caution, wait-and-see sentiment, and purchasing as needed, with future attention on aluminum price trends, aluminum scrap supply changes, and downstream order recovery.
[Data Source Disclaimer: All data beyond publicly available information are derived from public sources, market communication, and processing based on SMM’s internal database models by SMM, for reference only, and do not constitute decision-making advice.]
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