Futures Plunged, Aluminum Alloy Prices in the Doldrums [SMM Cast Aluminum Alloy Morning Comment]

4.29 SMM Cast Aluminum Alloy Morning Comment

Futures: The aluminum alloy 2606 contract fell sharply during the night session, opening at 23,075 yuan, reaching a high of 23,085 yuan, a low of 22,945 yuan, and closing at 22,990 yuan, down 160 yuan or 0.69% from the previous settlement price. The night session showed a one-sided downward trend overall, with a slight recovery at the end. Trading volume was 3,287 lots, open interest was 11,008 lots, with open interest decreasing by 1,115 lots, indicating slight capital outflow and strong bearish sentiment.

Spot-futures price spread daily report: According to SMM data, on April 28, the SMM ADC12 spot price had a theoretical premium of 770 yuan/mt over the most-traded cast aluminum alloy contract (AD2606) closing price at 10:15 AM.

Warrant daily report: SHFE data showed that on April 28, total registered warrants for cast aluminum alloy were 32,203 mt, an increase of 904 mt from the previous trading day. Specifically, Shanghai (1,822 mt, unchanged), Guangdong (10,908 mt, down 61 mt), Jiangsu (4,377 mt, up 390 mt), Zhejiang (9,477 mt, up 575 mt), Chongqing (4,143 mt, unchanged), and Sichuan (1,506 mt, unchanged).

Aluminum scrap: Yesterday, spot primary aluminum prices dropped sharply by 340 yuan/mt from the previous trading day, and aluminum scrap prices declined overall. Overall, supply-side policy constraints are unlikely to ease in the short term, with tight compliant supply and holders holding back from selling providing support, while the increasing probability of a pullback in imports is expected to further tighten supply. Demand side, the divergence between wrought aluminum alloy scrap and cast aluminum alloy downstream sectors remained unchanged, with aluminum price fluctuations and lack of orders still suppressing purchase willingness. In the short term, with the US-Iran conflict outlook uncertain, tight compliant supply and expected decline in aluminum scrap imports are expected to support aluminum scrap prices to hold up well.

Silicon metal: On April 28, SMM east China non-oxygen blown #553 was stable WoW; oxygen-blown #553 was stable WoW; #521 was stable WoW; #441 was stable WoW; #421 was stable WoW; #421 silicone-grade was stable WoW; #3303 was stable WoW. Silicon prices in Huangpu Port, Tianjin, northwest China, Xinjiang, Sichuan, Kunming, and Shanghai remained stable.

Markets outside China: Currently, ex-China ADC12 was quoted at $3,320-3,380/mt, relatively firm compared to domestic prices, with instant import losses widening to around 3,000 yuan, and the import window closed.

Summary: On Tuesday, the ADC12 market saw broad declines, with SMM ADC12 prices down 200 yuan/mt from the previous trading day to 23,900 yuan/mt. Demand side, weakness persisted, with insufficient downstream stockpiling willingness ahead of the holiday, a subdued trading atmosphere, and some enterprises reporting a slowdown in shipments, revealing emerging supply-demand imbalances. Meanwhile, cost support weakened simultaneously, further increasing downward pressure on prices. In the short term, under the dual-weak pattern of cost and demand, ADC12 prices are expected to remain in the doldrums, with market confidence yet to recover.

[Data source disclaimer: Data other than publicly available 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.]