9.28 SMM cast aluminum alloy morning comment
Futures: Last Friday, overnight SHFE base metals were closed due to the Mid-Autumn Festival holiday.
Basis daily: According to SMM data, on September 24, 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 790 yuan/mt.
Warrant daily: SHFE data showed that on September 24, total registered warrants for cast aluminum alloy stood at 19,861 mt, down 512 mt from the previous trading day.
Social inventory: Last week, China's social inventory of cast aluminum alloy ingots recorded 31,800 mt, down 2,700 mt WoW, ending a six-week streak of inventory buildup. This week, inventory shifted to destocking, mainly driven by a widening spot-futures price spread and the release of pre-holiday stocking demand, with enterprise procurement activity picking up. Next week marks the National Day holiday, and pre-holiday stockpiling demand may be further released. Social inventory is expected to continue destocking, but whether demand can sustain after the holiday still needs monitoring.
Aluminum scrap: Last Thursday, SMM A00 aluminum price closed at 24,240 yuan/mt, flat WoW from the previous trading day, and the aluminum scrap market remained stable in tandem. On the price difference front, on September 24, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,482 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,261 yuan/mt. Supply side, tax audits in Henan, Hunan, and other regions continued to escalate and deepen, with compliant invoiced aluminum scrap becoming increasingly scarce and prices receiving strong support. Meanwhile, non-invoiced cargo saw narrowing sales channels under compliance pressure, with some traders forced to cut prices to sell, keeping prices under persistent downward pressure. Demand side, the cast aluminum alloy "September peak season" fell short of expectations, with demand yet to see substantial release. Wrought aluminum alloy demand was moderate, and in-factory aluminum scrap inventory was relatively ample. Next week, the aluminum scrap market is expected to consolidate on a strong note, with mainstream trading range for shredded aluminum tense scrap (priced based on aluminum content) expected to center around 20,500-21,200 yuan/mt. Focus should be on the spread of tax audits and downstream pre-National Day holiday stockpiling.
Silicon metal: Last week, oxygen-blown #553 silicon in east China was at 9,400-9,500 yuan/mt, and #441 silicon was at 9,500-9,600 yuan/mt. Downstream pre-holiday restocking and increased export demand, coupled with higher freight costs, pushed up basis quotes in Tianjin, east China, and other regions. Some silicon suppliers raised their quote centers slightly, and low-priced cargo in the market tightened. In September, silicon metal's own fundamentals maintained a tight supply pattern, and with cost support, downside price support remained solid. Market views were divided between bulls and bears. After the holiday, attention should be paid to the pace of production cuts at southwest silicon enterprises during the dry season, the implementation of polysilicon production cuts, and changes in futures capital sentiment.
Markets outside China: On the import side, overseas ADC12 quotes remained in the range of $3,100-3,200/mt, with import profit margin near breakeven. Future attention should be paid to the replenishment of imported cargo.
Summary: Last week, SMM ADC12 price held steady at 24,500 yuan/mt during the week. Cost side, the impact of stricter tax invoice policy enforcement on the market became more evident, with higher compliance procurement requirements for enterprises, relatively tight supply of invoiced aluminum scrap, and comprehensive raw material procurement costs for some enterprises remaining at high levels. Demand side, as the National Day holiday approaches, pre-holiday restocking demand may further increase, but whether demand can sustain improvement after the holiday remains to be seen. Supply side, this year's National Day holiday saw an overall increase in enterprise shutdown days, mainly affected by tight raw material supply, high procurement costs, stricter tax invoice compliance requirements, and downstream clients' holiday arrangements. Some enterprises adjusted production by reducing operating rates, conducting maintenance, or extending holidays. In the short term, ADC12 prices are expected to consolidate on a strong note. Subsequent focus should be on the actual release of pre-holiday stockpiling, progress in tax invoice policy enforcement, and changes in aluminum scrap supply.
[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.]
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