9.2 SMM Cast Aluminum Alloy Morning Comment
Futures: Overnight, the most-traded aluminum alloy 2611 contract opened at 23,560 yuan/mt. After an initial shot up to a high of 23,560 yuan/mt, it lacked upward momentum, with prices consolidating lower to a low of 23,320 yuan/mt before closing at 23,410 yuan/mt, down 0.32%. Intraday, prices shot up at the open before falling under pressure, consolidating on a subdued note at highs overall. Trading volume pulled back MoM, while open interest rose slightly, intensifying capital competition. The 4-hour candlestick formed a long upper shadow, indicating clear resistance above. In the short term, prices are expected to consolidate at highs in a repeated pattern.
Spot-Futures Price Spread Daily: According to SMM data, on September 1, the theoretical premium of SMM ADC12 spot prices over the closing price of the most-traded cast aluminum alloy contract (AD2611) at 10:15 was 690 yuan/mt.
Warrant Daily: SHFE data showed that on September 1, total registered warrants for cast aluminum alloy stood at 21,589 mt, down 29 mt from the previous trading day.
Aluminum Scrap: On Tuesday, SMM A00 spot aluminum prices closed at 24,110 yuan/mt, up another 170 yuan/mt MoM from the previous trading day. Domestic aluminum scrap market prices generally edged higher, with some regional products making up for the previous day's decline. On the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was around 2,302 yuan/mt on September 1, while the price difference between A00 aluminum and shredded aluminum tense scrap was around 1,137 yuan/mt, holding steady WoW. Downstream scrap utilization enterprises have yet to see a clear recovery in orders, with the pre-peak season effect remaining insignificant. These enterprises continue to purchase as needed and maintain low inventory strategies, showing limited acceptance of higher prices. Some enterprises opted to hold off and observe after earlier price increases. On imports, previously traded resources arriving at ports have provided some supply replenishment, but the deeper effects of the UAE ban and EU tariff hikes will continue to limit the volume of high-quality scrap imports.
Silicon Metal: (1) Prices: Yesterday, SMM oxygen-blown #553 silicon in east China was around 9,500 yuan/mt, and #441 silicon was around 9,500-9,700 yuan/mt. Supply-side silicon enterprises held firm quotes yesterday, with some suppliers raising offers slightly. The most-traded futures contract pulled back on a subdued note, affected by long position profit-taking. Downstream buyers remained on the sidelines, with transactions limited to rigid demand. Low-priced cargoes were scarce, and the price center held up well. (2) Production: SMM data showed China's silicon metal production in August was 356,300 mt, down 8.2% MoM and 7.6% YoY. Affected by production cuts at large plants in Xinjiang in early September, silicon metal production is expected to continue its downtrend in September.
Markets Outside China: Overseas ADC12 offers remained stable at $3,050-3,180/mt. As domestic prices strengthened slightly, import losses narrowed further to around 600 yuan/mt.
Summary: On Tuesday, ADC12 market quotes held up well overall. SMM ADC12 prices rose 50 yuan/mt from the previous trading day to 24,100 yuan/mt. Driven by higher aluminum and aluminum scrap raw material prices, cost support strengthened further. On the demand side, entering the traditional peak season, end-use demand improved from earlier levels, but the overall recovery remained limited, with no significant increase in market purchasing yet. Some enterprises, having already adjusted prices the previous day, adopted a wait-and-see stance today, and the market remained cautious about further price increases. Overall, the current rise in ADC12 prices is mainly driven by the cost side, with demand improvement providing some support but not yet forming sustained upward momentum. In the short term, the market still needs to monitor cost changes and the recovery of end-use demand.
[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, and are for reference only, not constituting decision-making advice.]
