Overnight futures prices closed slightly lower, spot cargo held steady with a wait-and-see approach [SMM Cast Aluminum Alloy Morning Comment]

SMM Cast Aluminum Alloy Morning Comment on 2.12

Futures: The most-traded aluminum alloy 2604 contract opened at 22,255 yuan/mt overnight, hit a high of 22,360 yuan/mt, a low of 22,140 yuan/mt, and closed at 22,150 yuan/mt, dropping slightly by 0.25%. On the daily chart, the price pulled back after the previous high of 24,485 yuan/mt and is currently below the three moving averages, indicating a short-term weak trend. Trading volume and open interest decreased simultaneously, with sluggish market activity and strong wait-and-see sentiment.

Basis Daily: According to SMM data, on February 11, the theoretical premium of the SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy contract (AD2604) at 10:15 was 1,530 yuan/mt.

Industry Dynamics: According to CAAM data, in January, automobile production and sales reached 2.45 million units and 2.346 million units, respectively, with production up 0.01% YoY and sales down 3.2% YoY, and down 25.7% and 28.3% MoM, respectively. In January, NEV production and sales reached 1.041 million units and 945,000 units, respectively, up 2.5% and 0.1% YoY, with NEV sales accounting for 40.3% of total new car sales. According to CAAM analysis, in January, the overall automobile industry operated steadily, the passenger vehicle market declined, the commercial vehicle market continued its positive trend, the NEV market operated steadily, and automobile exports maintained growth. The main factors leading to the market decline were: first, the adjustment in the NEV purchase tax policy; second, car purchase subsidy policies in many regions were in transition at the turn of the year; third, some consumer demand was released in advance in 2025.

Warrant Daily: SHFE data showed that on February 11, the total registered warrants for cast aluminum alloy were 66,848 mt, down 452 mt from the previous trading day. Among them, the total registered volume in Shanghai was 6,490 mt, up 121 mt from the previous trading day; Guangdong's total registered volume was 23,241 mt, down 423 mt from the previous trading day; Jiangsu's total registered volume was 8,831 mt, down 90 mt from the previous trading day; Zhejiang's total registered volume was 22,249 mt, down 30 mt from the previous trading day; Chongqing's total registered volume was 4,684 mt, down 30 mt from the previous trading day; Sichuan's total registered volume was 1,353 mt, unchanged from the previous trading day.

Aluminum Scrap: Yesterday, spot primary aluminum prices edged down from the previous trading day, with the SMM A00 spot price closing at 23,260 yuan/mt. Aluminum scrap market prices remained generally stable today. Baled UBC was quoted at 16,800-17,250 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was quoted at 19,000-19,700 yuan/mt (ex-tax). On February 11, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,523 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,716 yuan/mt. The scrap aluminum market is expected to fluctuate at highs this week, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) at 19,000–19,800 yuan/mt (tax excluded). Close attention should be paid to the production halts and resumption schedules of downstream processing enterprises, as well as the progress of environmental protection enforcement across regions, to guard against a persistently sluggish trading atmosphere in the scrap aluminum market following another pullback in aluminum prices.

Overseas market: On the import side, overseas ADC12 offers remained in the range of $2,840–2,900/mt, with the import profit margin rebounding close to the break-even line.

Summary: On Wednesday, the A00 aluminum price edged down 30 yuan/mt day-on-day to 23,260 yuan/mt, while the SMM ADC12 price held steady at 23,650 yuan/mt. As the Chinese New Year approaches, enterprises across the secondary aluminum alloy industry chain have entered a concentrated holiday period, leading to a noticeable decline in market liquidity. Actual transactions remained sluggish, with spot quotes largely adjusting slightly in line with futures movements. Supply side, secondary aluminum enterprises gradually began halting production, with most furnace shutdowns scheduled between February 5 and 13. Production resumptions are mostly planned around the eighth day of the first lunar month or the Lantern Festival, resulting in an estimated shutdown period of 8–20 days, which is generally longer YoY. Against the backdrop of yet-to-improve demand, fundamental support for prices continued to weaken. The price center for secondary aluminum alloy showed a slow downward trend before the holiday, and short-term prices are expected to remain in the doldrums with a high-level bias.

[Data source statement: Except for publicly available information, other data are derived by SMM based on public information, market communication, and SMM’s internal database model, and are for reference only, not constituting decision-making advice.]