Aluminum Alloy Night Session Fluctuated Higher, Cost Support Keeps Short-Term Bias Strong [SMM Cast Aluminum Alloy Morning Comment]

5.14 SMM Cast Aluminum Alloy Morning Comment

Futures: During the night session, the most-traded aluminum alloy 2607 contract opened higher overall and then strengthened amid fluctuations. The night session opened at 23,605 yuan/mt, reaching a high of 23,680 yuan/mt and a low of 23,480 yuan/mt, and closed at 23,595 yuan/mt, up 115 yuan/mt or 0.49% from the previous trading day. After the night session opened, prices fluctuated slightly, generally running above the average price line with limited pullback strength and strong bullish support. The night session trading volume was 2,232 lots, open interest stood at 13,915 lots, up 322 lots MoM, with modest capital inflows. Futures showed a clear rebound from lows, bullish sentiment warmed up, and the short-term outlook is expected to hold up well.

Spot-futures price spread daily report: According to SMM data, on May 13, the SMM ADC12 spot price's theoretical premium over the most-traded cast aluminum alloy contract (AD2606) at the 10:15 closing price narrowed to 340 yuan/mt.

Aluminum scrap: On Wednesday, A00 aluminum prices were raised by 180 yuan/mt from the previous trading day. Aluminum scrap market prices generally followed the uptrend, while aluminum tense scrap prices in some regions chose to hold steady in a wait-and-see mode. Shredded aluminum tense scrap (priced based on aluminum content) mainstream range operated around 20,500-21,000 yuan/mt (tax-exclusive). Imported zorba (Ningbo Port) weekly operating range was raised by 200 yuan/mt to 21,870-22,070 yuan/mt (tax-inclusive). Price difference between A00 aluminum and aluminum scrap: on May 13, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,745 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,208 yuan/mt. Supply side, the tightening trend of compliant invoiced sources intensified, raw material prices swung wildly, and aluminum scrap yards generally held back from selling and held prices firm. High LME prices led import traders to adopt cautious strategies, and subsequent imports are expected to pull back. Demand side, the traditional off-season combined with prominent compliant invoice issues led some regional enterprises to reduce or halt production. The wrought aluminum alloy scrap segment was supported by secondary aluminum plate/sheet and strip operating rates, but the support was limited. Downstream procurement was mainly driven by rigid demand, with strong wait-and-see sentiment.

Silicon metal: On May 13, SMM east China non-oxygen blown #553 was stable from the previous day; oxygen-blown #553 was down 50 yuan/mt from the previous day; #521 was stable; #441 was stable; #421 was stable; #421 for silicone use was stable; #3303 was stable. Silicon prices in Huangpu Port, Tianjin, and parts of north-west China also declined. Silicon prices in Kunming, Xinjiang, Shanghai, and Sichuan remained stable.

Markets outside China: Current import ADC12 quotes rose to the high range of $3,360-3,450/mt, with instant import losses exceeding 3,000 yuan/mt, and the theoretical import window remained closed.

Summary: On Wednesday, ADC12 market quotes were slightly raised overall, with mainstream increases concentrated at 100 yuan/mt, while some enterprises expanded the increase to 200 yuan/mt supported by cost and invoice factors. Currently, raw material costs fluctuate at highs, reverse invoicing is becoming stricter, and invoiced supply is tight, providing price support. Meanwhile, market sentiment improved and enterprises' willingness to hold prices firm strengthened. However, demand side, downstream procurement pace remained mainly driven by rigid demand, with limited transaction volume expansion. Sustained price rises still require further demand support, and the short-term outlook is expected to move sideways.

[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.]