Cast Aluminum Alloy Social Inventory Increases for Two Consecutive Weeks to 28,100 mt; Inventory Buildup Pace Expands [SMM Morning Comment on Cast Aluminum Alloy]

8.21 SMM Morning Comment on Cast Aluminum Alloy

Futures: The aluminum alloy 2610 contract opened at 22,900 yuan/mt in the night session, initially dipping to a low of 22,820 yuan/mt, then rebounding and shooting up to a high of 22,960 yuan/mt, before pulling back slightly toward the session end to close at 22,895 yuan/mt, down 0.22%. The 4-hour chart continued to consolidate on a weak note at low levels, with strong resistance from the moving averages above. Indicators remained low, with limited strength in long-short contest, and the short-term market was expected to consolidate on a subdued note.

Spot-Futures Price Spread Daily Report: According to SMM data, the theoretical spot premium of SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2610) was 955 yuan/mt on August 20.

Warrant Daily Report: Data from SHFE showed that total cast aluminum alloy warrant registration stood at 19,998 mt on August 20, down 392 mt from the previous trading day.

Social Inventory: China's domestic cast aluminum alloy ingot social inventory recorded 28,100 mt this week, up 2,500 mt WoW, marking the second consecutive week of inventory buildup, with the pace of accumulation further expanding WoW. The market is still in the off-season, with subdued downstream purchase willingness and slow shipment pace. Meanwhile, spot-futures procurement increased periodically, providing some replenishment to inventory. Overall, short-term social inventory still faces inventory buildup pressure and is expected to continue its mild rebound trend.

Industry Dynamics: According to customs data, China's imports of unwrought aluminum alloy in July 2026 totaled 59,900 mt, down 14.5% YoY but up 8.7% MoM; cumulative imports for January-July stood at 493,400 mt, down 19.4% YoY. On the export side, unwrought aluminum alloy exports in July were 58,600 mt, surging 135.1% YoY but down 12.8% MoM; cumulative exports for January-July reached 297,100 mt, up 104.6% YoY.

Aluminum Scrap: Dragged by the decline in primary aluminum prices, aluminum scrap prices pulled back slightly this week. However, supported by cost floor and scarcity of scrap, the decline in scrap prices was relatively limited, maintaining its resilience. On the spot-futures price spread, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan stood at 2,360 yuan/mt on August 20, while the price difference between A00 aluminum and shredded aluminum tense scrap was 1,150 yuan/mt. Domestically, the impact of reverse invoicing policy deepened, with the scarcity of compliant invoiced aluminum scrap rising continuously, still constraining the operating rates and procurement of scrap utilization enterprises. On imports and exports, according to SMM customs data, China's aluminum scrap imports in July 2026 totaled approximately 119,600 mt, down MoM from 133,000 mt in June, mainly due to the earlier inverted price spread between Chinese and overseas markets and shipping delays, keeping the supplement of high-quality overseas scrap low. The impact of the UAE's aluminum scrap export ban and the EU's tariff hike continued to shrink supply from Europe and the Middle East, further strengthening Southeast Asia's position as a major supplementary source. The aluminum scrap market is expected to maintain a narrow sideways consolidation pattern next week, with demand suppression and cost floor.

Silicon Metal: Spot silicon metal prices continued to edge up this week. As of August 20, SMM east China oxygen-blown #553 silicon was at 9,300-9,400 yuan/mt, up 200 yuan/mt WoW; #441 silicon was at 9,400-9,600 yuan/mt, up 200 yuan/mt WoW. On market quotes and transactions, supported by expectations for production cuts from large plants in Xinjiang at month-end, silicon enterprises generally held a strong sentiment to hold prices firm, with quotes rising WoW. Futures-linked traders also followed the increase in futures prices, with few low-priced cargoes available in the market. Suppliers generally raised their price centers, while downstream users in China and overseas markets showed little willingness to rush to buy amid continuous price rise. Some downstream users were not receptive to high prices, mainly placing orders on demand for restocking.

Markets Outside China: Current overseas ADC12 quotes were in the range of $3,070-3,190/mt, with the import loss at around 1,000 yuan/mt.

Summary: ADC12 market quotes remained largely stable on Thursday, with SMM ADC12 price flat from the previous day at 23,900 yuan/mt. Fluctuations in futures and aluminum scrap cost side were limited, while the decline in aluminum prices narrowed, with cost side still supporting spot prices, leaving limited room for further downward adjustment. However, end-use demand remained weak, with downstream procurement mainly for rigid demand, and overall market transactions lacked significant improvement. Short-term ADC12 prices are expected to consolidate on a subdued note within a range. The high cost of compliant raw materials, closed import window, and low operating rates provided a floor for prices, limiting downside room. However, weak end-use consumption, insufficient downstream purchase willingness, and the simultaneous accumulation of enterprise finished product and social inventory left prices with no upward momentum. If the hot off-season ends and end-user orders see substantial improvement, prices could regain upward momentum in the future.

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