Dual Supply-Demand Pressure Combined with Cost Support, ADC12 Prices Moved Sideways [SMM Cast Aluminum Alloy Morning Comment]

5.11 SMM Cast Aluminum Alloy Morning Comment

Futures: During last Friday's night session, the aluminum alloy 2607 contract moved downwards after a higher opening, opening at 23,040 yuan/mt, reaching a high of 23,070 yuan/mt, a low of 22,910 yuan/mt, and closing at 22,950 yuan/mt, down 75 yuan/mt or 0.33% from the previous settlement price. The intraday chart showed a fluctuating pullback with slight stabilization toward the end of the session; trading volume was 1,532 lots, open interest was 11,933 lots, up 397 lots from the previous day, with the overall pattern showing a fluctuating downward trend.

Basis daily report: According to SMM data, on May 8, the theoretical premium of SMM ADC12 spot price over the most-traded cast aluminum alloy contract (AD2606) closing price at 10:15 was 605 yuan/mt.

Warrant daily report: SHFE data showed that on May 8, total registered warrants for cast aluminum alloy were 33,250 mt, down 181 mt from the previous trading day. Among them, Shanghai had a total registered volume of 1,999 mt (unchanged from the previous trading day); Guangdong had 10,457 mt (unchanged); Jiangsu had 5,999 mt (unchanged); Zhejiang had 9,657 mt (down 30 mt); Chongqing had 4,143 mt (unchanged); Sichuan had 995 mt (down 151 mt).

Aluminum scrap: Last Friday, A00 aluminum price rebounded 170 yuan/mt from the previous trading day, and aluminum scrap market prices generally followed with increases of 100-200 yuan/mt. Shredded aluminum tense scrap (priced based on aluminum content) mainstream range operated around 20,500-21,000 yuan/mt (tax-exclusive). Imported zorba (Ningbo Port) operated in the range of 21,670-21,970 yuan/mt (tax-inclusive). On the price difference between A00 aluminum and aluminum scrap, on May 8, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,570 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,925 yuan/mt. Supply side, the shipment pace of aluminum scrap collection and delivery after the holiday remained stable compared with April overall; raw material prices swung wildly, and aluminum scrap yards generally held back from selling and held prices firm; high LME prices led import traders to adopt cautious strategies, and subsequent imports are expected to pull back. Demand side, the traditional off-season has set in, the operating rate of secondary aluminum producers pulled back slightly, the aluminum tense scrap segment purchased as needed and operated with low inventory, the wrought aluminum alloy scrap segment was supported by secondary aluminum plate/sheet and strip operating rates but with limited strength, and downstream demand was mainly rigid with strong wait-and-see sentiment. The off-season effect on the demand side continued, downstream secondary aluminum enterprises remained cautious and watchful, purchasing mainly through small rigid-demand restocking orders. The divergence between aluminum tense scrap and wrought aluminum alloy scrap remained unchanged, order growth was limited, and vigilance is still needed against market risks from aluminum price fluctuations and tight supply.

Silicon metal: After the Labour Day holiday, the silicon market trended stronger, with the most-traded futures contract breaking through resistance levels to rise above 9,000 yuan/mt. Silicon suppliers tested spot price increases multiple times with small increments, and east China #553 silicon quotes rose above 9,300 yuan/mt. In the futures market, the SI2609 contract touched an intraday high of 9,180 yuan/mt on Thursday. On Friday morning, the most-traded contract pulled back to around 9,000-9,100 yuan/mt. This round of futures strength was mainly driven by macro and capital momentum. From late April to early May, silicon enterprises hedged in batches on rallies and increased basis selling, with ownership gradually shifting to futures-spot traders, supported by rigid demand, and spot prices passively followed the uptrend. From an industry perspective, the certainty of increased silicon metal supply in June is relatively strong, which suppresses the sustainability of subsequent price increases. This round of price rise has alleviated factory pressure to some extent, the tug-of-war between longs and shorts has intensified, and subsequent focus should be on capital logic shifts, changes in macro sentiment, and the operating pace on the industry side.

Markets outside China: Currently, import ADC12 quotes remain at the high range of $3,320-3,400/mt, while the domestic spot price center has continued to shift downward, causing import instant losses to further widen to over 3,000 yuan/mt, with the theoretical import window remaining closed.

Summary: Overall, ADC12 prices are expected to continue in the doldrums with a narrow range, but downside space is limited. On the pressure side, weak downstream demand and continued accumulation of social inventory form dual suppression, the market lacks substantive bullish support, and upward price drivers are insufficient; on the support side, raw material costs such as aluminum scrap continue to fluctuate at highs, combined with the closed import window, providing relatively solid bottom support for spot prices, and enterprises have limited willingness to make significant price concessions for shipments. In the short term, ADC12 prices will still mainly fluctuate downward.

[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.]