5.25 SMM Cast Aluminum Alloy Morning Comment
Futures: During the night session last Friday, the aluminum alloy 2607 contract showed a pattern of initial decline followed by recovery, moving sideways. The contract opened at 23,175 yuan/mt, reached a high of 23,175 yuan/mt, a low of 22,980 yuan/mt, and closed at 23,105 yuan/mt, down slightly by 15 yuan from the previous settlement price, a decline of 0.06%. In the early part of the night session, prices dropped rapidly, then found support at lower levels and gradually rebounded, closing slightly higher at the end of the session, with overall fluctuations remaining limited. Trading volume was 1,582 lots, open interest was 15,096 lots, down slightly by 3 lots, with cautious market trading sentiment and weak tug-of-war between longs and shorts.
Spot-futures price spread daily report: According to SMM data, on May 22, the SMM ADC12 spot price had a theoretical premium of 550 yuan/mt over the most-traded cast aluminum alloy contract (AD2607) closing price at 10:15 AM.
Warrant daily report: SHFE data showed that on May 22, total registered warrants for cast aluminum alloy were 39,131 mt, an increase of 89 mt from the previous trading day. Among them, Shanghai had a total registered volume of 2,515 mt, unchanged from the previous trading day; Guangdong had a total registered volume of 10,797 mt, a decrease of 91 mt from the previous trading day; Jiangsu had a total registered volume of 7,532 mt, unchanged from the previous trading day; Zhejiang had a total registered volume of 12,153 mt, an increase of 180 mt from the previous trading day; Chongqing had a total registered volume of 5,139 mt, unchanged from the previous trading day; Sichuan had a total registered volume of 995 mt, unchanged from the previous trading day.
Aluminum scrap: Last Friday, SMM A00 prices stopped rising and pulled back, down 40 yuan/mt from the previous trading day, while the aluminum scrap market remained generally stable with minor adjustments in some regional products. Aluminum scrap prices are expected to hold up well at elevated levels this week, with shredded aluminum tense scrap (priced based on aluminum content) maintaining a mainstream range of 20,500-21,100 yuan/mt (tax-exclusive). On the policy side, "reverse invoicing" regulatory oversight continues, and the tight supply of compliant sources is unlikely to reverse in the short term; the lagging effect of imported aluminum scrap continues to emerge, with actual port arrivals contracting and expected to further intensify tight supply; geopolitical risks provide floor support for aluminum prices, which in turn pushes up aluminum scrap prices. However, the peak season effect is fully winding down, with end-use demand orders weakening; wrought aluminum alloy scrap raw material inventory in Henan and other regions remains elevated, suppressing procurement demand, and the secondary aluminum market is expected to continue its pattern of weak supply and demand.
Silicon metal: Last week, SMM east China oxygen-blown #553 silicon was at 9,000-9,200 yuan/mt, and #441 silicon was at 9,300-9,400 yuan/mt. The most-traded contract on the futures market moved sideways around 8,450 yuan/mt. Silicon metal prices moved sideways under expectations of both supply and demand increases. Weekend news about a mine accident in Shanxi may trigger short-term fluctuations in coal prices on the raw material side for silicon metal, providing a sentiment boost. Attention should be paid to changes in the pace of operating rates on both supply and demand sides.
Markets outside China: Current import ADC12 quotes are in the high range of $3,380-3,420/mt, with an immediate import loss of approximately 3,365 yuan/mt, and the theoretical import window remains closed.
Summary: Last Friday, the ADC12 market overall continued its stable wait-and-see pattern, with cautious market sentiment, and the SMM ADC12 price held steady at 23,700 yuan/mt from the previous day. Current prices are "under pressure from both sides" — on one hand, end-use demand recovery remains limited, downstream procurement stays at just-needed levels, and insufficient transaction volume constrains upward momentum; on the other hand, raw material costs such as aluminum scrap remain elevated, compliant aluminum scrap circulation is tight, enterprises face difficulties in replenishing raw materials and are forced to rely more on existing inventory to maintain production, with cost support remaining evident. Overall, the market is still in a tug-of-war phase between "high cost support" and "weak demand suppression," and ADC12 prices are expected to continue holding up well in a narrow range in the short term.
[Data source disclaimer: Data other than publicly available information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.]
