4.2 SMM Cast Aluminum Alloy Morning Comment
Futures: Overnight, the aluminum alloy 2605 contract fluctuated upward before pulling back late in the session. It opened around 23,500 yuan/mt, fluctuated upward intraday to a high of 23,635 yuan/mt, then came under pressure and pulled back to a low of 23,320 yuan/mt, and finally closed at 23,595 yuan/mt, up 40 yuan/mt, or 0.17%, from the previous trading day's settlement price. Trading volume was 1,307 lots, down 3,277 lots WoW, while open interest stood at 5,792 lots, down 438 lots. Technically, the KDJ indicator fell back rapidly late in the session, suggesting a short-term need for adjustment; the DKX indicator's long and short lines flattened, indicating an intensified tug-of-war between longs and shorts. Overall, prices at night session fluctuated around the 23,500 yuan/mt mark, with evident resistance at 23,600-23,650 yuan/mt and relatively strong support at 23,300 yuan/mt. In the short term, the contract is expected to maintain a rangebound pattern.
Spot-Futures Price Spread Daily: According to SMM data, on April 2, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2605) narrowed slightly to 945 yuan/mt.
Warrant Daily: SHFE data showed that as of April 2, total registered cast aluminum alloy warrants stood at 32,723 mt, an increase of 111 mt from the previous trading day. By region, Shanghai totaled 1,942 mt, unchanged; Guangdong 13,566 mt, down 214 mt; Jiangsu 3,331 mt, up 627 mt; Zhejiang 9,044 mt, down 302 mt; Chongqing 3,634 mt, unchanged; and Sichuan 1,206 mt, unchanged.
Aluminum scrap: Yesterday, spot primary aluminum edged up 30 yuan/mt from the previous trading day, and the aluminum scrap market was largely stable overall. The aluminum scrap market is expected to hover at highs with a firmer tone next week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) running at 20,800-21,300 yuan/mt (ex-tax). Supply side, regulatory policies such as "reverse invoicing" are unlikely to see any substantive easing in the short term. Tight compliant supply, coupled with continued sentiment to hold back cargoes, will keep providing bottom support for prices. Demand side, the peak-season recovery fell short of expectations, end-user order recovery lacked momentum, and the pattern of mainly just-in-time procurement is expected to continue. In the short term, close attention should be paid to the actual impact of Middle East geopolitical conflicts on global aluminum smelter capacity, downstream end-user orders, and the implementation progress of the reverse invoicing policy, while staying alert to the risk of wild swings in aluminum prices at highs.
Silicon metal: This week, the silicon metal market remained weak in consolidation, with transaction centers for some grades edging lower. As of April 2, SMM east China oxygen-blown #553 silicon was at 9,000-9,200 yuan/mt, down 100 yuan/mt WoW; #441 silicon at 9,300-9,400 yuan/mt, down 50 yuan/mt WoW; and #3303 silicon at 10,100-10,300 yuan/mt, down 100 yuan/mt WoW. Operating rates at silicon enterprises in different regions both rose and fell, with limited overall change. The price of the most-traded silicon metal futures contract returned to 8,300 yuan/mt, and most silicon producers remained broadly loss-making. Cost support below strengthened, and the market hovered at lows in consolidation.
Markets outside China: Imported ADC12 offers remained in the range of $3,320-3,380/mt, while immediate import losses still stayed above 2,000 yuan/mt, leaving the theoretical import window closed.
Summary: On Thursday, ADC12 market prices remained largely stable. Downstream procurement stayed cautious, and overall market transactions were mediocre. Some enterprises were pessimistic about April order expectations, wait-and-see sentiment intensified, and demand continued to provide weak support for prices. The market's main contradiction shifted from raw material cost support to insufficient consumption momentum, with gains in finished alloy ingots clearly lagging those on the raw material side, thereby narrowing industry profit margins. In terms of supply, the operating rate of leading enterprises was flat MoM at 59.5%; during the Qingming Festival, leading enterprises will maintain normal production, while some small and medium-sized enterprise plan to suspend production in stages due to insufficient orders, and the industry's overall operating rate is expected to pull back slightly. Cost support is weakening, demand recovery is slow and expectations are diverging. Coupled with holiday disruptions, the market is unlikely to form clear upward momentum in the short term, and ADC12 prices are expected to continue moving sideways in a narrow range. Going forward, focus should be placed on actual post-holiday consumption performance and how changes in macro sentiment are transmitted to prices.
[Data Source Statement: Except for public information, all other data is processed and derived by SMM based on public information, market communication, and SMM's internal database models, and is for reference only and does not constitute decision-making advice.]
