Contract selling pressure released in stages; tightening aluminum scrap circulation supports raw material side [SMM cast aluminum alloy morning comment]

9.22 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the most-traded aluminum alloy 2611 contract closed at 23,550 yuan/mt, with a high of 23,710 yuan/mt and a low of 23,475 yuan/mt, down 105, or 0.44%. Trading volume was 3,886, down 3,909 MoM. After the high-volume decline, trading volume shrank, with short-term selling pressure released in stages, but bullish absorption was not particularly strong. Open interest was 19,924, down 103. The decline on reduced open interest saw both bulls and bears exit simultaneously, with no obvious increase in short positions attacking, as profit-taking positions were closed out.

Basis Daily: According to SMM data, on September 21, 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 750 yuan/mt.

Warrant Daily: SHFE data showed that on September 21, total registered cast aluminum alloy warrants stood at 21,821 mt, down 515 mt from the previous trading day. By region, Shanghai registered 1,477 mt, unchanged from the previous trading day; Guangdong registered 778 mt, down 59 mt; Jiangsu registered 8,299 mt, down 90 mt; Zhejiang registered 9,226 mt, down 154 mt; Chongqing registered 1,892 mt, down 212 mt; Sichuan registered 149 mt, unchanged from the previous trading day.

Aluminum Scrap: Yesterday, SMM A00 aluminum price closed at 24,320 yuan/mt, down 60 yuan/mt MoM from the previous trading day. Aluminum scrap market prices followed slightly lower, with some regional varieties holding steady amid wait-and-see sentiment. On the price spread front, on September 21, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,572 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,351 yuan/mt. The aluminum scrap market is expected to continue consolidating on a strong note. Supply side, the impact of tax audits continues to spread. If aluminum scrap yards slow down shipments, circulating supply will tighten again, providing strong support for aluminum scrap prices. Going forward, close attention will remain on the chain reactions of tax audits across the aluminum scrap industry chain and changes in orders at scrap utilization enterprises.

Silicon Metal: On September 21, SMM prices in east China were stable for non-oxygen blown #553, oxygen-blown #553, #521, #441, #421, #421 for silicone use, and #3303. Some silicon prices in Kunming were raised. Silicon prices in south China, Guangdong, Huangpu Port, Tianjin, northwest China, Xinjiang, Sichuan, and Shanghai were stable.

Markets Outside China: On the import side, imported ADC12 offers remained at $3,100–3,200/mt. As the yuan strengthened, imported conversion costs continued to move lower, and immediate profit/loss has been compressed to near the break-even line. Attention will be paid to whether imported supply can effectively replenish the market.

Summary: Yesterday, ADC12 market prices were broadly stable. SMM ADC12 price held steady at 24,500 yuan/mt from the previous trading day, with no significant changes on either the cost or demand side, and market sentiment remained largely wait-and-see. Cost side, aluminum scrap raw material prices saw limited fluctuations overall today. However, as tax invoice policies tightened in multiple regions, compliance procurement requirements for enterprises increased, and supply of tax-invoiced aluminum scrap remained relatively tight. Comprehensive procurement costs for some enterprises remained elevated, limiting near-term downside. Demand side, market purchases remained primarily need-based, with peak-season demand release still limited. Short-term prices are expected to consolidate on a strong note. Future price trends will hinge on the progress of tax invoice policy implementation, changes in aluminum scrap raw material supply, and downstream stockpiling ahead of the dual holidays.

[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 investment advice.]