Cast aluminum volume shrinks while open interest rises, intensifying divergence; aluminum scrap consolidates on a strong note [SMM cast aluminum alloy morning comment]

9.8 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the most-traded aluminum alloy 2611 contract opened at 23,740 yuan/mt, hit a high of 23,740 yuan/mt and a low of 23,545 yuan/mt, and closed at 23,640 yuan/mt, down 30, or -0.13%. Trading volume was 3,087 lots, down 1,353 lots MoM, with volume shrinking notably and market trading activity cooling. Open interest was 18,280 lots, up 774 lots MoM, with positions added at highs, widening the long-short divergence as capital jostled at elevated levels. The decline in trading volume suggests waning upward momentum.

Spot-Futures Price Spread Daily: According to SMM data, on September 7, the theoretical premium of SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy contract (AD2611) at 10:15 was 625 yuan/mt.

Warrant Daily: SHFE data showed that on September 7, total registered warrants for cast aluminum alloy stood at 22,889 mt, up 60 mt from the previous trading day. By region, Shanghai registered 1,625 mt, unchanged from the previous trading day; Guangdong registered 1,639 mt, down 30 mt; Jiangsu registered 7,149 mt, unchanged; Zhejiang registered 9,952 mt, up 90 mt; Chongqing registered 2,165 mt, unchanged; Sichuan registered 359 mt, unchanged.

Aluminum Scrap: Yesterday, SMM A00 aluminum closed at 24,410 yuan/mt, up 50 yuan/mt MoM from the previous trading day. Aluminum scrap market prices were broadly steady with slight upward adjustments. A substantive recovery in end-use demand still needs to be confirmed, and destocking of wrought aluminum alloy scrap inventories will take time. Scrap utilization enterprises are likely to continue purchasing as needed and maintain low-inventory operating strategies, with the pace of price follow-through expected to remain slow. This week, the aluminum scrap market is expected to consolidate on a strong note with the price center edging slightly higher, with close attention needed on the pace of downstream order recovery.

Silicon Metal: On September 7, SMM prices in east China were stable for non-oxygen blown #553, oxygen-blown #553, #521, #441, #421, and #421 for silicone use, while #3303 rose 50 yuan/mt. Prices for certain silicon grades in Shanghai moved up, while prices in south China, Guangdong, Kunming, Huangpu Port, Tianjin, northwest China, Xinjiang, and Sichuan were stable.

Markets Outside China: On the import side, overseas ADC12 offers remained steady at $3,050-3,180/mt. As the yuan strengthened, immediate import losses narrowed further to around 400 yuan/mt.

Summary: Yesterday, SMM A00 aluminum closed at 24,410 yuan/mt, up 50 yuan/mt MoM from the previous trading day. Aluminum scrap market prices were broadly steady with slight follow-through gains. This week, the aluminum scrap market is expected to consolidate on a strong note with the price center edging slightly higher. The mainstream trading range for shredded aluminum tense scrap (priced based on aluminum content) is expected to center around 20,300-21,000 yuan/mt, with close attention needed on the pace of downstream order recovery.

[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 and do not constitute decision-making advice.]