Cost support coupled with off-season demand leads to narrow price adjustments for ADC12 aluminum alloy in the short term [SMM Morning Comment on Cast Aluminum Alloy]

6.16 SMM Morning Comment on Cast Aluminum Alloy

Futures Market: On Friday evening, the most-traded AD2511 cast aluminum alloy futures contract opened at 19,400 yuan/mt, with a high of 19,470 yuan/mt, a low of 19,355 yuan/mt, and closed at 19,470 yuan/mt, up 40 yuan/mt or 0.21% from the previous close. Trading volume was 2,744 lots, and open interest stood at 8,740 lots.

Spot-Futures Price Spread Daily Report: According to SMM data, on June 13, the SMM ADC12 spot price was at a theoretical premium of 625 yuan/mt over the 10:15 a.m. closing price of the most-traded cast aluminum alloy futures contract (AD2511).

Aluminum Scrap: On Friday, spot primary aluminum prices continued to rise by 80 yuan/mt from the previous trading day. SMM A00 aluminum closed at 20,730 yuan/mt, with aluminum scrap market prices following the increase but varying. Regionally, Shanghai, Jiangsu, Shandong, and other regions closely tracked aluminum prices, with price adjustments ranging from 50-100 yuan/mt. In Jiangxi, Hubei, Henan, and other regions, price adjustments lagged behind aluminum prices, and after two consecutive days of price increases, quotes on Friday remained flat compared to the previous day, with upside room hitting a bottleneck. By product, baled UBC prices increased by 150 yuan/mt on Friday after small increases in the previous two days, narrowing the price difference between A00 aluminum and aluminum scrap. Shredded aluminum tense scrap prices remained flat. It is expected that the aluminum scrap market will continue to fluctuate at highs. The tight supply of aluminum tense scrap remains unchanged, with solid price support. Wrought aluminum alloy scrap continues to fluctuate rangebound with primary aluminum, but the risk of a high-level correction in primary aluminum prices, combined with weak demand during the off-season, may suppress upside room.

Overseas Markets: On June 13, the CIF import price of ADC12 held steady at $2,410-2,450/mt. The import spot price increased by 100 yuan/mt to around 19,300 yuan/mt, narrowing the immediate import loss to 500-600 yuan/mt. The local ADC12 price in Thailand, excluding tax, remained flat at 81-82 Thai baht/kg compared to the previous day.

Inventory: According to SMM statistics, on June 13, the combined daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 16,733 mt, an increase of 189 mt from the previous trading day.

Summary: On Friday, the SMM A00 aluminum price increased by 80 yuan/mt from the previous trading day to 20,730 yuan/mt. Domestic SMM ADC12 prices rose by 50 yuan/mt to the range of 19,900-20,200 yuan/mt. Quotes in the secondary aluminum market were slightly differentiated, with some enterprises actively increasing quotes by 100 yuan/mt driven by rising cost side pressures, while others faced significant resistance to price increases due to a lack of orders. The current characteristics of the traditional off-season are prominent, with sustained weak demand side conditions suppressing the upside room for ADC12 prices. However, the rapid increase in raw material prices on the cost side provides support, and it is expected that ADC12 prices will remain rangebound in the short term.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should make decisions cautiously and not rely on this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]

》Click to view the SMM Aluminum Industry Chain Database

》Subscribe to view historical spot prices of SMM metals