SHFE Aluminum Edged Down in Night Session, Erasing Daytime Gains [SMM Cast Aluminum Alloy Morning Comment]

2.5 SMM Cast Aluminum Alloy Morning Comment

Futures: The aluminum alloy 2603 contract closed at 22,215 yuan/mt, down 380 yuan or 1.68% from the previous trading day. Trading volume was 3,160 lots, and open interest was 4,417 lots, down 113 lots from the previous day, indicating capital outflow. After hitting a recent high of 24,410 yuan, the price experienced a rapid decline, touching a low of 21,680 yuan, before entering a consolidation phase. The current candlestick shows a weak consolidation pattern.

Basis Daily: According to SMM data, on February 4, the SMM ADC12 spot price was at a theoretical premium of 1,335 yuan/mt to the closing price of the most-traded cast aluminum alloy contract (AD2603) at 10:15.

Warrant Daily: SHFE data showed that on February 4, the total registered warrant volume for cast aluminum alloy was 66,791 mt, down 122 mt from the previous trading day. The breakdown by region was Shanghai (4,941 mt, down 30 mt), Guangdong (23,642 mt, up 359 mt), Jiangsu (9,917 mt, down 90 mt), Zhejiang (21,984 mt, down 211 mt), Chongqing (5,616 mt, down 150 mt), and Sichuan (691 mt, unchanged).

Aluminum Scrap: Yesterday, spot primary aluminum prices stopped falling and rose compared to the previous trading day, with SMM A00 spot closing at 23,760 yuan/mt. Aluminum scrap market prices actively followed the increase today. Baled UBC was quoted at 16,900–17,300 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was quoted at 19,100–19,800 yuan/mt (ex-tax). The price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,775 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,861 yuan/mt. Aluminum scrap prices in Shanghai, Jiangsu, Shandong, and Jiangxi closely followed aluminum price adjustments, with pullbacks ranging from 200–500 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 in the range of 19,100–20,000 yuan/mt (ex-tax). Before the Chinese New Year, it is necessary to closely track the trend of primary aluminum, the progress of lifting environmental protection alerts in central China, and pre-holiday shutdowns, while remaining cautious about aluminum prices retreating after a rapid rise, which could lead to aluminum scrap pullbacks. Market trading activity will remain sluggish.

Silicon Metal: On February 4, SMM prices in east China were non-oxygen blown #553 (9,100–9,300 yuan/mt), oxygen-blown #553 (9,300–9,400 yuan/mt), #521 (9,400–9,500 yuan/mt), #441 (9,400–9,600 yuan/mt), #421 (9,500–9,800 yuan/mt), #421 for silicone use (9,800–10,200 yuan/mt), and #3303 (10,200–10,500 yuan/mt). Silicon prices in Tianjin, northwest China, Kunming, Shanghai, Xinjiang, and Sichuan held steady.

Overseas market: Overseas ADC12 quotes remained stable at $2,840–2,900/mt, while domestic spot prices were raised by 200 yuan/mt to 22,900 yuan/mt, with import arbitrage profits hovering around 300 yuan/mt.

Summary: In the spot market, A00 aluminum prices rebounded sharply by 470 yuan/mt from the previous trading day to 23,760 yuan/mt, while SMM ADC12 prices increased by 150 yuan/mt to 23,800 yuan/mt. Futures showed a notable rebound, but secondary aluminum smelters' quotations diverged—some enterprises raised offers by 200 yuan/mt in line with market trends, largely recovering the previous day's losses, while others, constrained by weak orders, kept quotations stable and adopted a wait-and-see approach. As aluminum prices rebounded, market procurement sentiment improved slightly compared to earlier, but downstream buyers continued to make just-in-time procurement. Supply side, approaching the Chinese New Year holiday, some secondary aluminum smelters have scheduled early shutdowns starting from the 5th, due to reduced orders and environmental protection-related controls, with the overall holiday duration expected to be longer than the same period in previous years. Overall, downstream demand continues to shrink, and fundamental support for prices is marginally weakening; secondary aluminum alloy prices are expected to hover at highs 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.]