Futures prices pull back, spot aluminum follows decline; aluminum scrap raw material tightness still provides support [SMM Cast Aluminum Alloy Morning Comment]

9.14 SMM cast aluminum alloy morning comment

Futures: Last Friday night, the most-traded AD2611 contract opened at 23,280 yuan/mt, shot up to 23,285 yuan/mt after the open before plunging to a session low of 23,145 yuan/mt. It then consolidated and rebounded, stabilizing near the close to settle at 23,200 yuan/mt, down 175 yuan from the previous settlement price of 23,375 yuan, a decline of 0.75%, extending the downtrend from Friday's daytime session.

Spot-futures price spread daily: According to SMM data, on September 11, the theoretical premium of SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2611) was 895 yuan/mt.

Warrant daily: SHFE data showed that on September 11, total registered warrants for cast aluminum alloy stood at 23,104 mt, up 1 mt from the previous trading day.

Aluminum scrap: Last Friday, SMM A00 aluminum price closed at 24,240 yuan/mt, plunging 320 yuan/mt from the previous trading day, while aluminum scrap market prices followed the decline with relatively cautious magnitude. On the price difference front, on September 11, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,508 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,287 yuan/mt, widening slightly again WoW. Supply side, the tight raw material supply pattern remained unchanged, with compliant invoiced aluminum scrap becoming increasingly scarce, constraining scrap utilization enterprises' operations and procurement. Against this backdrop, some aluminum scrap yards actively sold amid high aluminum prices while reducing purchases and stockpiling, leading to a phased release of circulating supply. The aluminum scrap market is expected to consolidate on a strong note this week. At the early stage of the September peak season, a substantive recovery in downstream end-user orders still needs to be observed. Scrap yards' active selling may persist for a while, but the tightness in high-quality invoiced scrap is unlikely to improve materially.

Silicon metal: Last week, oxygen-blown #553 silicon in east China was at 9,400-9,500 yuan/mt. Last Friday, pressured by weakening macro and coking coal sentiment, along with pending verification of downstream polysilicon demand support, the most-traded silicon metal contract pulled back from around 8,800 yuan/mt to below 8,650 yuan/mt. The market saw a tug-of-war between longs and shorts with prices consolidating on a subdued note. Supply side, growth is limited in the short term, and fundamentals still suggest support below.

Markets outside China: Current overseas ADC12 offers pulled back slightly to $3,080-3,200/mt. As domestic prices declined, import losses widened slightly to around 500 yuan/mt.

Summary: Last Friday, the ADC12 market overall showed lower prices and divergent trading activity. SMM ADC12 price fell 150 yuan/mt from the previous day to 24,300 yuan/mt. Demand side, as prices pulled back, downstream purchasing sentiment remained cautious, with most enterprises reporting that clients mainly adopted a wait-and-see approach and made just-in-time procurement. However, some deferred purchasing demand from the earlier period of sustained price increases was released after the pullback, with low-priced cargoes providing some stimulus to phased restocking demand, and some enterprises saw improved trading volumes compared with earlier. In the short term, price trends will still mainly hinge on cost support and whether September peak season demand can materialize further.

[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, for reference only and do not constitute decision-making advice.]