Under the Influence of Multiple Factors, Cast Aluminum Alloy Prices Follow Primary Aluminum Fluctuations [SMM Cast Aluminum Alloy Morning Comment]

February 2.3 SMM Cast Aluminum Alloy Morning Comment

Futures: The aluminum alloy 2603 contract closed at 22,150 yuan/mt, down 1.38% from the previous trading day. Trading volume was 8,762 lots, and open interest decreased by 437 lots, indicating that some bulls chose to exit and wait on the sidelines during the price decline, with cautious market sentiment. The K-value was 18.96, the D-value was 31.24, and the J-value fell to -5.6, entering the oversold territory, increasing the likelihood of a short-term technical rebound. In the near term, market sentiment remains fragile, and prices may continue to decline due to inertia. However, with the KDJ indicator entering the oversold zone, a technical rebound could occur at any time.

Basis Daily Report: According to SMM data, on February 2, the SMM ADC12 spot price showed a theoretical premium of 1,210 yuan/mt over the closing price of the cast aluminum alloy most-traded contract (AD2603) at 10:15.

Warrant Daily Report: SHFE data showed that on February 2, the total registered warrants for cast aluminum alloy were 67,725 mt, a decrease of 481 mt from the previous trading day. Among them, the total registered volume in Shanghai was 5,030 mt, down 60 mt; Guangdong was 23,465 mt, down 30 mt; Jiangsu was 10,246 mt, down 303 mt; Zhejiang was 22,404 mt, down 88 mt; Chongqing was 5,889 mt, unchanged; Sichuan was 691 mt, unchanged.

Aluminum scrap side: Spot primary aluminum prices plummeted compared to the previous trading day. SMM A00 spot closed at 23,700 yuan/mt, and aluminum scrap market prices followed with a significant decline today. Baled UBC was quoted at 17,150-17,550 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was quoted at 19,200-19,900 yuan/mt (tax excluded). The price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,608 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,694 yuan/mt. The aluminum scrap market was expected to hover at highs this week, with shredded aluminum tense scrap (priced based on aluminum content) mainly ranging from 19,100-20,000 yuan/mt (tax excluded). Before the Chinese New Year, it is necessary to closely track the trend of primary aluminum, the progress of lifting environmental protection warnings in central China, and pre-holiday production halts, while remaining vigilant against a pullback in aluminum scrap driven by aluminum prices retreating after a rapid rise. Market trading activity will remain sluggish.

Silicon metal side: On February 2, SMM east China non-oxygen blown #553 was at 9,100-9,300 yuan/mt; oxygen-blown #553 at 9,300-9,400 yuan/mt; #521 at 9,400-9,500 yuan/mt; #441 at 9,400-9,600 yuan/mt; #421 at 9,500-9,800 yuan/mt; #421 for silicone use at 9,800-10,200 yuan/mt; #3303 at 10,200-10,500 yuan/mt. Silicon prices in Huangpu Port, Tianjin, and parts of north-west China also rose. Prices in Kunming, Shanghai, Xinjiang, and Sichuan remained stable.

Overseas market: Overseas ADC12 offers fell by USD 50/mt WoW to USD 2,840–2,900/mt, while domestic spot prices dropped to around 23,000 yuan/mt, with import arbitrage maintaining near 300 yuan/mt.

Summary: In the spot market, A00 aluminum prices fell sharply by 960 yuan/mt day-on-day to 23,700 yuan/mt, while SMM ADC12 prices were lowered by 500 yuan/mt to 23,850 yuan/mt. Affected by continued futures weakness, producer offers accelerated their decline, with intraday losses widening significantly. Although inquiry activity increased, actual transactions remained sluggish amid the rapid price drop, and downstream wait-and-see sentiment was evident. Approaching Chinese New Year, some die-casting enterprises have gradually halted operations, downstream demand continues to shrink, and raw material costs are declining, weakening fundamental support. Secondary aluminum alloy prices are expected to remain in the doldrums in the short term.

[Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not intended as decision-making advice.]