Aluminum Alloy Follows Primary Aluminum Decline, Market Hold-Back-From-Selling Sentiment Strengthens [SMM Cast Aluminum Alloy Morning Comment]

5.19 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded aluminum alloy 2607 contract closed at 23,025 yuan/mt overnight, up 90 yuan from the previous trading day, a gain of 0.39%. Trading volume was 1,965 lots, down 3,641 MoM, and open interest was 14,632 lots, up 138 lots MoM. Overall trading activity was low, with open interest edging up. The WR value was -70.43, in the neutral range, not entering overbought/oversold territory. There was no clear short-term reversal signal, and the tug-of-war between longs and shorts remained relatively balanced.

Spot-futures price spread daily report: According to SMM data, on May 18, the SMM ADC12 spot price was at a theoretical premium of 680 yuan/mt to the most-traded cast aluminum alloy contract (AD2607) closing price at 10:15 AM.

Warrant daily report: SHFE data showed that on May 18, total registered warrants for cast aluminum alloy were 37,534 mt, an increase of 1,388 mt from the previous trading day. Of this, Shanghai had 2,515 mt (up 394 mt), Guangdong had 10,791 mt (up 0 mt), Jiangsu had 7,082 mt (up 91 mt), Zhejiang had 10,981 mt (up 753 mt), Chongqing had 5,170 mt (up 150 mt), and Sichuan had 995 mt (up 0 mt) from the previous trading day.

Aluminum scrap: A00 aluminum prices fell 320 yuan/mt from the previous trading day yesterday, and aluminum scrap market prices followed suit. Aluminum scrap market is expected to continue fluctuating at highs this week, with shredded aluminum tense scrap (priced based on aluminum content) mainstream range maintained at 20,400-21,000 yuan/mt (tax-exclusive). Supply side, the tightening fiscal and tax regulatory stance is unlikely to ease in the short term, and invoice source shortages and expectations of reduced imports will continue to provide floor support for aluminum scrap prices, with the market pattern of holders holding prices firm and holding back from selling persisting. Demand side, off-season effects continued to intensify, with insufficient incremental terminal orders. Secondary aluminum enterprises were cutting production, and downstream procurement remained dominated by small-lot just-needed restocking, making concentrated stockpiling unlikely. The secondary aluminum market is expected to continue its pattern of weakness in both supply and demand.

Silicon metal: On May 18, SMM east China non-oxygen blown #553 was down 50 yuan/mt WoW; oxygen-blown #553 was down 50 yuan/mt WoW; #521 was down 50 yuan/mt WoW; #441 was down 50 yuan/mt WoW; #421 was down 50 yuan/mt WoW; #421 silicone-grade was stable WoW; #3303 was stable WoW. Some silicon prices in Huangpu Port, Tianjin, Northwest, and Shanghai also declined. Silicon prices in Kunming, Xinjiang, and Sichuan remained stable.

Markets outside China: On the import front, current import ADC12 quotes edged down slightly but remained in the high range of $3,340-3,430/mt. Immediate import losses exceeded 3,000 yuan/mt, and the theoretical import window remained closed.

Summary: The ADC12 market was mostly down yesterday. Driven by the sharp pullback in aluminum prices, most enterprises lowered their quotes accordingly, with declines generally controlled at 100-200 yuan/mt, while the cost side still provided some support. Currently, compliant aluminum scrap sources were tightening, and some secondary aluminum enterprises were forced to cut production. Market supply contracted slightly, causing hold-back-from-selling sentiment to intensify amid the price decline, providing support for prices. However, persistently weak downstream demand continued to clearly constrain price rises. In the short term, ADC12 prices are expected to continue moving sideways. Under the tug-of-war between cost support and weak demand, downside room is relatively limited, but rebound momentum is also insufficient.

[Data source disclaimer: Data other than public information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.]