ADC12 Generally Stable with Slight Fall amid Tug-of-War between Sellers and Buyers [SMM Cast Aluminum Alloy Morning Comment]

5.18 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded aluminum alloy 2607 contract closed at 24,305 yuan/mt overnight, down 55 yuan from the previous trading day, a decline of 0.23%. Short-term SMA lines turned downward, with prices falling below the 5/10/20/40-period moving averages, breaking the short-term bullish trend. The WR indicator was at -84.57, in the oversold zone, indicating that short-term downward momentum had been fully released, with potential for a technical rebound.

Spot-futures price spread daily report: According to SMM data, on May 15, the SMM ADC12 spot price was at a theoretical premium of 535 yuan/mt to the cast aluminum alloy most-traded contract (AD2606) closing price at 10:15.

Warrant daily report: SHFE data showed that on May 15, total registered warrants for cast aluminum alloy were 36,146 mt, an increase of 844 mt from the previous trading day. Of this, Shanghai registered 2,121 mt (unchanged from the previous trading day); Guangdong registered 10,791 mt (up 332 mt); Jiangsu registered 6,991 mt (up 482 mt); Zhejiang registered 10,228 mt (up 30 mt); Chongqing registered 5,050 mt (unchanged); Sichuan registered 995 mt (unchanged).

Aluminum scrap: A00 aluminum prices fell 240 yuan/mt from the previous trading day yesterday, and aluminum scrap market prices generally followed the decline. Aluminum scrap market is expected to continue fluctuating at highs this week, with shredded aluminum tense scrap (priced based on aluminum content) mainstream range maintained at 20,500-21,300 yuan/mt (tax exclusive). On the supply side, tightening fiscal and tax supervision is unlikely to ease in the short term, and ticket shortages and expectations of reduced imports will continue to provide floor support for aluminum scrap prices, with the market pattern of holders holding prices firm and holding back from selling persisting. On the demand side, off-season effects continued to intensify, with insufficient incremental end-user orders. Secondary aluminum enterprises showed a trend of production cuts, and downstream procurement remained dominated by small-lot just-needed restocking, making concentrated stockpiling actions unlikely. The secondary aluminum market is expected to continue its pattern of weakness in both supply and demand.

Silicon metal: On May 15, SMM east China non-oxygen blown #553 edged down 50 yuan/mt from the previous day; oxygen-blown #553 edged down 50 yuan/mt from the previous day; #521 remained stable from the previous day; #441 edged down 50 yuan/mt from the previous day; #421 remained stable from the previous day; #421 for silicone use remained stable from the previous day; #3303 remained stable from the previous day. Silicon prices in Huangpu Port, Tianjin, northwest China, and Shanghai also declined partially. Silicon prices in Kunming, Xinjiang, and Sichuan remained stable. Silicon (Si≥97%) prices also remained stable today.

Markets outside China: On the import side, current import ADC12 quotes edged down slightly but remained at the high range of $3,360-3,430/mt. Immediate import losses exceeded 3,000 yuan/mt, and the theoretical import window remained closed.

Summary: Last Friday, the ADC12 market was generally stable with slight fall overall. Some enterprises followed with slight declines driven by weakening aluminum prices, while others maintained stable prices and a wait-and-see stance due to high costs and tight compliant supply sources. From the supply-demand structure perspective, demand side performance remained mediocre, suppressing price rises; however, the supply side saw marginal tightening due to ticket shortages, import contraction, and phased production cuts, providing certain support for prices. Against this backdrop, ADC12 prices are expected to continue moving sideways in the short term, with relatively limited downside room.

[Data source disclaimer: Data other than public 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.]