3.4 SMM Cast Aluminum Alloy Morning Comment
Futures: The overnight AD2604 cast aluminum alloy contract saw a fluctuating trend, dipping first and then rising. After the open, prices quickly fell to an intraday low of 22,765 yuan/mt, then bottomed out and rebounded, fluctuating upward. During the session, the tug-of-war between longs and shorts was intense, with prices repeatedly seesawing; late in the session, prices gradually moved higher, recouping most of the losses. It finally closed up 1.49% at 23,090 yuan/mt.
Spot-Futures Price Spread Daily: According to SMM data, on March 3, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2604) was 1,215 yuan/mt.
Warrant Daily: SHFE data showed that on March 3, total registered cast aluminum alloy warrants were 62,228 mt, down 975 mt from the previous trading day. Of this, Shanghai totaled 6,070 mt, down 90 mt; Guangdong totaled 21,089 mt, down 365 mt; Jiangsu totaled 8,080 mt, down 180 mt; Zhejiang totaled 21,162 mt, down 240 mt; Chongqing totaled 4,534 mt, up 0 mt; and Sichuan totaled 1,293 mt, up 0 mt.
Aluminum scrap: On Tuesday this week, spot primary aluminum rose 330 yuan/mt MoM from the previous trading day, and aluminum scrap market prices actively followed the gains. The aluminum scrap market was expected to hover at highs this week, with shredded aluminum tense scrap (priced based on aluminum content) mainly trading around 19,000-19,600 yuan/mt (tax excluded). Supply side, yards gradually resumed operations across the board, and the release of supply was set to increase, but recycling policies still constrained circulation. Demand side, downstream enterprises accelerated the pace of resuming operations, and restocking demand was expected to be released slowly. Overall, the tug-of-war between sellers and buyers continued; market trading sentiment was set to gradually recover but remained sluggish. Close attention should be paid to downstream production resumption progress, primary aluminum price trends, and changes in recycling policies, and vigilance is needed against price fluctuation risks.
Silicon metal: (1) Price: Yesterday, SMM east China oxygen-blown #553 silicon was at 9,000-9,200 yuan/mt, and 441# silicon was at 9,200-9,500 yuan/mt. Yesterday afternoon, silicon metal futures prices fluctuated sharply amid macro disturbances; the most-traded contract’s low fell below 8,200 yuan/mt, and it closed late in the session at 8,205 yuan/mt. Some silicon enterprises in north China lowered their quotes, but they still lacked a price advantage versus spot-futures traders; downstream users mainly bought the dip. (2) Production: SMM data showed that domestic silicon metal production in February fell 26.6% MoM and 5% YoY. After factoring in the number of days, the average daily production in February was down by around 19% from January. In March, some capacity on the supply side was set to resume production, and March’s average daily silicon metal production was expected to rise by about 13% MoM.
Overseas market: Overseas ADC12 quotes rose to $2,950-3,000/mt, while the domestic price increase lagged behind, and the import spot profit/loss narrowed to the breakeven line.
Summary: On Tuesday, domestic ADC12 spot quotes continued to rise, with the mainstream increase reaching 300 yuan/mt. The cost side was supported by synchronized increases in raw material prices, providing a solid bottom; demand side, although steadily recovering, downstream enterprises still maintained a just-in-time procurement pace. Driven by consecutive gains, the market sentiment of “rush to buy amid continuous price rise and hold back amid price downturn” intensified, and inquiry activity increased, but the actual transaction volume increase was limited. At present, as the resumption of work and production progresses, producers’ willingness to sell has strengthened, while downstream order release remains cautious. The current uptrend is driven more by cost push and market sentiment, with mediocre transaction performance. Overall, in the short term, ADC12 prices are expected to maintain a sideways movement pattern. Before the production resumption pace is fully realized, supply release is relatively slow; coupled with cost support, downside room for prices is limited. Going forward, as enterprises fully resume production, the market focus will gradually shift from the supply side to the realization of end-use consumption. If end-use orders increase in volume in stages while primary aluminum continues to fluctuate upward, the ADC12 price center still has room to move up; if demand recovery falls short of expectations, prices may continue a sideways consolidation trend.
[Data Source Statement: All data other than public information are processed by SMM based on public information, market communication, and SMM’s internal database models, for reference only and not constituting decision-making advice.]
