Aluminum Price Rebound Provides Cost Support for Alloys, Weak Demand Limits Upside Room [SMM Cast Aluminum Alloy Morning Comment]

5.20 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded aluminum alloy AD2607 contract closed at 23,125 yuan/mt overnight, edging up 5 yuan from the previous trading day, up 0.02%. Trading volume was 2,168 lots, down 1,705 MoM, and open interest was 14,977 lots, up 256 lots MoM, with slight capital inflow. The current price is near the 5- and 10-day moving averages but below the 20-, 40-, and 60-day moving averages, showing short-term signs of stabilization while the medium-term trend remains weak. The bearish moving average alignment has not been fully reversed, with resistance concentrated in the 23,260-23,380 range.

Spot-futures price spread daily report: According to SMM data, on May 19, the SMM ADC12 spot price was at a theoretical premium of 550 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 19, total registered warrants for cast aluminum alloy were 38,704 mt, an increase of 1,170 mt from the previous trading day. Among them, Shanghai had a total registered volume of 2,515 mt, unchanged from the previous trading day; Guangdong had 10,669 mt, down 122 mt; Jiangsu had 7,232 mt, up 150 mt; Zhejiang had 12,154 mt, up 1,173 mt; Chongqing had 5,139 mt, down 31 mt; Sichuan had 995 mt, unchanged from the previous trading day.

Aluminum scrap: Yesterday, A00 aluminum prices rose 150 yuan/mt from the previous trading day, and aluminum scrap prices edged up accordingly. 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 20,500-21,300 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 bottom 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 end-user orders. Secondary aluminum enterprises showed a trend of production cuts, and downstream procurement remained dominated by small-lot just-needed restocking, making concentrated stockpiling unlikely. The secondary aluminum market will continue its supply-demand dual-weak trend.

Silicon metal: Yesterday, SMM east China oxygen-blown #553 silicon was at 9,100-9,200 yuan/mt, and #441 silicon was at 9,300-9,400 yuan/mt. Spot prices were generally stable with slight fall. Yesterday, silicon metal futures prices fluctuated around 8,450 yuan/mt. At the beginning of the week, as futures declined, pricing-based procurement transactions increased WoW, and with no major adjustments in supply and demand, silicon metal prices moved sideways.

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

Summary: Yesterday, the ADC12 market overall remained stable. As aluminum prices rebounded, some enterprises slightly raised their quotes, but most still chose to hold prices steady and wait, with overall price adjustment range limited. From a fundamental perspective, demand side was generally stable with slight fall, constraining upside room; cost side rose due to higher aluminum prices, providing price support. In addition, compliant aluminum scrap sources tightened and prices remained elevated, forcing some secondary aluminum enterprises to cut production; while heavy rain brought disturbance expectations to some local areas, actual impact had not yet materialized. ADC12 prices are expected to continue a narrow fluctuating trend in the short term, with upside room still requiring further demand-side support.

[Data source statement: 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.]