Inventory of secondary aluminum ingots in three regions rises to 17,500 mt, inventory buildup during off-season suppresses ADC12 prices [SMM Morning Comment on Cast Aluminum Alloy]

SMM Morning Comment on Cast Aluminum Alloy on June 19

Futures Market: Overnight, the most-traded AD2511 cast aluminum alloy futures contract opened at 19,720 yuan/mt, hitting a new high since listing at 19,820 yuan/mt, with a low of 19,705 yuan/mt, and finally closed at 19,810 yuan/mt, up 80 yuan/mt or 0.41% from the previous close. Trading volume was 3,381 lots, and open interest was 9,257 lots.

Spot-Futures Price Spread Daily Report: According to SMM data, on June 18, the theoretical premium of the SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 narrowed to 450 yuan/mt.

Aluminum Scrap Market: On Wednesday, spot primary aluminum surged by 280 yuan/mt from the previous trading day. SMM A00 spot aluminum closed at 20,900 yuan/mt, while the aluminum scrap market struggled to catch up with the price increase. Regionally, price adjustments in Shanghai, Jiangsu, and Shandong ranged from 200-250 yuan/mt, while in Jiangxi, Hubei, Henan, and Foshan, price adjustments lagged behind aluminum prices, ranging from 100-150 yuan/mt. By product, baled UBC prices continued to rise by 50 yuan/mt on Wednesday, and shredded aluminum tense scrap prices increased by 100 yuan/mt from the previous day. Wheel hubs removed from vehicle and scrap motorcycle wheel prices rose by 100-200 yuan/mt from the previous day. In terms of price difference between A00 aluminum and aluminum scrap, the price difference between mechanical casting aluminum scrap and A00 aluminum in Shanghai widened by 8 yuan/mt to 1,858 yuan/mt, and the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan increased by 211 yuan/mt to 1,718 yuan/mt. Considering the difficulty in actual shipments, aluminum scrap suppliers adopted a cautious wait-and-see attitude amid rising aluminum prices. It is expected that the aluminum scrap market will continue to fluctuate at highs. The tight supply situation 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, coupled with weak demand during the off-season, may suppress upside room.

Overseas Market: The CIF import price of ADC12 remained stable at $2,420-2,450/mt. The import spot price increased by 100 yuan/mt to around 19,300 yuan/mt, with an immediate import loss in the range of 500-600 yuan/mt. The local tax-excluded quote for ADC12 in Thailand remained stable at 82 Thai baht/kg.

Inventory: According to SMM statistics, the total daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi on June 18 was 17,534 mt, an increase of 199 mt from the previous trading day.

Summary: Driven by the strong upward trend in aluminum prices, the prices of raw materials for secondary aluminum actively followed suit on Wednesday, but the increase was weaker than that of primary aluminum, with an overall increase in the range of 100-200 yuan/mt. Although the continuous rise in cost side has provided upward momentum for ADC12 prices, the actual increase was limited, with a general market increase of 100 yuan/mt. Yesterday, the SMM ADC12 price increased by 100 yuan/mt to the range of 20,000-20,300 yuan/mt. Currently in the traditional off-season for the industry, new orders are growing weakly, and persistent demand-side weakness is suppressing the upside room for ADC12 prices. However, the cost support logic still exists, 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 and decision-making. Clients should make decisions cautiously and should not replace their independent judgment with this information. Any decisions made by clients are not related to SMM.]

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