In July, the PMI of secondary aluminum remained below the 50 mark. In August, the market was still dragged down by the off-season demand [SMM morning comment on cast aluminum alloy].

8.1 SMM Morning Comment on Cast Aluminum Alloy

Futures Market: Overnight, the most-traded AD2511 futures contract for cast aluminum alloy opened at the highest price of 19,950 yuan/mt, with the lowest price at 19,850 yuan/mt, and finally closed at 19,865 yuan/mt, down 85 yuan/mt or 0.43% from the previous close. Trading volume was 973 lots, and open interest was 8,483 lots, with bears mainly increasing their positions.    

Industry Dynamics: (1) The PMI for the secondary aluminum industry in July fell MoM to 38.0%, remaining below the 50 mark. Looking ahead to August, it is expected that the end-use consumption of secondary aluminum will not improve significantly, and the industry PMI will remain below the 50 mark.

Spot-Futures Price Spread Daily Report: According to SMM data, on July 31, the SMM ADC12 spot price had a theoretical premium of 130 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 a.m.

Aluminum Scrap: On Thursday, the spot price of primary aluminum fell by 90 yuan/mt from the previous trading day. SMM A00 spot aluminum closed at 20,580 yuan/mt, and the aluminum scrap market remained generally stable. Baled UBC aluminum scrap was concentratedly quoted at 15,250-157,500 yuan/mt (tax not included), and shredded aluminum tense scrap (water price) was concentratedly quoted at 16,800-17,300 yuan/mt (tax not included). It is expected that the price center of the aluminum scrap market will further return to off-season levels next week. The bearish expectations for primary aluminum (such as macro pressure and high inventory) have not dissipated, coupled with the continued weak demand during the off-season, limiting the upside room for aluminum scrap as a whole. However, the tight supply of raw materials still provides medium and long-term bottom support. Shredded aluminum tense scrap is supported by the supply side, with relatively strong price resilience, and is expected to fluctuate rangebound within 16,800-17,300 yuan/mt (tax not included). Baled UBC aluminum scrap, due to weak end-use demand, faces significant downward pressure, and prices may fall to 15,000-15,500 yuan/mt (tax not included).

Silicon Metal: (1) Price: This week, the spot price of silicon metal fluctuated significantly within a short period, with frequent ups and downs in market prices, and the overall trading center weakened compared to last week. Yesterday, SMM east China oxygen-blown #553 silicon was priced at 9,700-9,900 yuan/mt, down 300 yuan/mt WoW. #441 silicon was priced at 9,900-10,100 yuan/mt, down 300 yuan/mt WoW. #421 silicon (used in silicone) was priced at 10,300-10,600 yuan/mt, unchanged WoW. (2) Production: According to SMM data, silicon metal production in July 2025 was 338,300 mt, up 3.2% MoM and down 30.6% YoY. The cumulative production of silicon metal from January to July 2025 was 2.2112 million mt, down 20.0% YoY. The production schedule for silicon metal in August is expected to increase to around 360,000-370,000 mt.

Overseas Market: Overseas ADC12 quotes remained stable at $2,460-2,480/mt, and imported spot prices remained stable at around 19,300 yuan/mt, with imports maintaining an immediate loss. Local ADC12 quotes in Thailand were concentrated at 82-83 baht/kg (tax not included).

Inventory side: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 31,319 mt on August 1, up 93 mt from the previous trading day and 1,434 mt WoW.

Summary: Aluminum prices pulled back slightly yesterday, while the secondary aluminum market maintained stability, with SMM ADC12 prices holding steady at 20,100 yuan/mt. Recent end-use consumption remained sluggish, and actual transactions were weak amid soft demand. However, persistently high aluminum scrap procurement costs provided price support. Overall, cost support led to a relatively moderate WoW decline in ADC12 prices, narrowing its inverted spread with A00. Yet, off-season demand continued to cap upside potential, with short-term price movements likely to fluctuate rangebound as cost support counters weak demand and high inventory pressure.

[Data source statement: Data beyond publicly available information were derived from public sources, market exchanges, and SMM's internal database models for reference only, not as decision-making advice.]