Weak Demand, ADC12 Spot Cargo Continued to Decline [SMM Cast Aluminum Alloy Morning Comment]

4.8 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded aluminum alloy 2606 contract closed at 23,595 yuan/mt overnight, down 55 yuan from the previous trading day's close, a decline of 0.23%. Trading volume was 1,340 lots, down 2,647 lots from the previous value, with a notable contraction in volume. Open interest stood at 12,896 lots, up 100 lots from the previous value, indicating slight capital inflow and divergence between bulls and bears. Sufficient volume during the rally phase and continued volume contraction during the pullback phase suggest limited selling pressure from bears and that bulls have not fully exited, characteristic of a healthy high-level shakeout structure.

Spot-futures price spread daily report: According to SMM data, on April 7, the SMM ADC12 spot price was at a theoretical premium of 870 yuan/mt over the most-traded cast aluminum alloy contract (AD2606) closing price at 10:15 AM.

Warrant daily report: SHFE data showed that on April 7, total registered warrants for cast aluminum alloy were 31,183 mt, down 453 mt from the previous trading day. By region: Shanghai 1,912 mt (down 30 mt), Guangdong 12,358 mt (down 121 mt), Jiangsu 3,602 mt (down 30 mt), Zhejiang 8,471 mt (down 272 mt), Chongqing 3,634 mt (unchanged), and Sichuan 1,206 mt (unchanged).

Aluminum scrap: Spot primary aluminum fell 30 yuan/mt from the previous trading day, while the aluminum scrap market saw mixed changes. Price difference side, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 3,115 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,825 yuan/mt. The aluminum scrap market was expected to continue consolidating at highs this week, with shredded aluminum tense scrap (priced based on aluminum content) mainstream range operating around 19,800-20,500 yuan/mt (tax exclusive). In the short term, close attention should still be paid to the impact of geopolitical conflicts on primary aluminum price fluctuations, the actual recovery of end-user orders, and the actual implementation progress of supply-side policies, with vigilance against the risk of wild swings in prices.

Silicon metal: Spot silicon metal prices trended weaker yesterday. SMM east China oxygen-blown #553 silicon was at 8,900-9,100 yuan/mt, down 100 yuan/mt from the previous day, and #441 silicon was at 9,200-9,300 yuan/mt, down 100 yuan/mt from the previous day. The SI2605 contract closed at 8,260 yuan/mt yesterday. The decline in silicon prices stimulated the release of some rigid demand orders from downstream and traders, while weak supply and demand left silicon prices consolidating at lows.

Markets outside China: Ex-China ADC12 quotes remained in the range of $330-3,330/mt, with instant import losses continuing at around 2,000 yuan, and the theoretical import window remained closed.

Summary: Spot side, the ADC12 market continued to be in the doldrums yesterday. Affected by aluminum prices being in the doldrums and lackluster demand-side performance, market sentiment turned cautious, with most participants slightly lowering offers while a few enterprises held firm and took a wait-and-see approach. Low-priced resources increased, the transaction center shifted downward, and prices showed passive pullback characteristics. In the short term, against the backdrop of weakening marginal cost support and limited demand improvement, ADC12 prices were expected to remain in the doldrums.

[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.]