Futures consolidate at highs; spot aluminum alloy slightly raised [SMM cast aluminum alloy morning comment]

9.1 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the most-traded aluminum alloy 2610 contract opened at 23,355 yuan/mt in the night session. After briefly shooting up to 23,450 yuan/mt, bulls lost momentum and prices consolidated lower, with the intraday low at 23,245 yuan/mt. The contract closed at 23,305 yuan/mt, down 0.38%. Intraday, prices retreated after rapid rise under pressure, showing an overall retreat-after-rapid-rise pattern. Trading volume contracted, while open interest edged up, as the tug-of-war between longs and shorts continued. On the 4-hour chart, the contract shot up but closed with an upper shadow, with resistance gradually emerging. In the short term, the market has entered a phase of consolidation at highs.

Spot-Futures Price Spread Daily: According to SMM data, on August 28, the theoretical premium of SMM ADC12 spot prices over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2610) narrowed to 670 yuan/mt.

Warrant Daily: SHFE data showed that on August 31, total registered warrants for cast aluminum alloy stood at 21,618 mt, unchanged from the previous trading day.

Aluminum Scrap: On Monday, SMM A00 spot aluminum prices closed at 23,970 yuan/mt, up 70 yuan/mt WoW. Domestic aluminum scrap prices generally edged up, while some regional grades held steady. The market is currently at the tail end of the traditional off-season, and orders at downstream scrap utilization enterprises have yet to show a clear recovery. The pre-peak-season effect is not significant, and scrap utilization enterprises continue to purchase as needed and maintain low inventory strategies, with limited acceptance of higher prices. Some enterprises chose to hold off after earlier price increases. On the import side, previously traded cargoes have been arriving at ports, providing some supply replenishment. However, the deeper effects of the UAE ban and EU tariff hikes will continue to limit the volume of high-quality scrap imports.

Silicon Metal: On August 31, SMM prices in east China were stable for non-oxygen blown #553, oxygen-blown #553, #521, #441, #421, #421 for silicone use, and #3303. Prices for certain grades in Tianjin and Sichuan were raised, while prices in south China, Guangdong, Kunming, Huangpu Port, northwest China, Xinjiang, and Shanghai remained stable.

Markets Outside China: Overseas ADC12 offers remained stable at $3,050-3,180/mt. As domestic prices firmed slightly, import losses narrowed to around 700 yuan/mt. The import window remains closed, and overseas cargoes are unlikely to provide effective supply replenishment to the domestic market in the near term.

Summary: On Monday, ADC12 market quotes generally held up well. SMM ADC12 prices rose 100 yuan/mt from the previous trading day to 24,050 yuan/mt, mainly driven by stronger cast aluminum alloy futures and a higher price center in the market. Futures gains outpaced spot prices, and the spot-futures price spread weakened slightly. The futures rebound provided some support to spot prices. However, primary aluminum price gains were relatively limited. Cost support strengthened marginally but with limited upward push, and end-use demand has yet to show clear improvement. Market transactions remained relatively subdued. As a result, enterprises were cautious in following the uptrend, with most raising prices by around 100 yuan/mt, while some kept quotes unchanged. Overall, short-term ADC12 prices have seen their price center move higher, supported by stronger futures and cost support. However, weak demand continues to constrain spot price gains. Whether prices can rise further will depend on futures performance and improvements in end-use transactions.

[Data source statement: Except for publicly available information, all other data are processed by SMM based on public information, market communication, and SMM's internal database models. They are for reference only and do not constitute investment advice.]