Cost Support vs. Weak Demand: Secondary Aluminum Prices Continue Narrow Adjustment [SMM Morning Comment on Cast Aluminum Alloy]

SMM Morning Comment on Cast Aluminum Alloy on June 20

Futures Market: Overnight, the most-traded AD2511 cast aluminum alloy futures contract opened at 19,715 yuan/mt, with a high of 19,745 yuan/mt, a low of 19,650 yuan/mt, and closed at 19,720 yuan/mt. It fell by 60 yuan/mt or 0.30% from the previous close, with a trading volume of 2,277 lots and an open interest of 8,466 lots. Bears were the main force in increasing their positions.

Spot-Futures Price Spread Daily Report: According to SMM data, on June 19, 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 310 yuan/mt.

Aluminum Scrap Market: On Thursday, primary aluminum spot prices fell by 130 yuan/mt from the previous trading day. SMM A00 aluminum closed at 20,770 yuan/mt, while the aluminum scrap market struggled to catch up with the price increase. By product, baled UBC prices continued to rise by 50 yuan/mt, while shredded aluminum tense scrap prices pulled back by 100 yuan/mt from the previous day. Regarding the price difference between A00 aluminum and aluminum scrap, the price difference between Shanghai mechanical casting aluminum scrap and A00 aluminum increased by 21 yuan/mt to 1,837 yuan/mt, while the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan decreased by 120 yuan/mt to 1,598 yuan/mt. Considering the difficulty in actual shipments, aluminum scrap suppliers adopted a cautious wait-and-see attitude towards price adjustments amid rising aluminum prices. Next week, the aluminum scrap market is expected to continue the pattern of "fluctuating at highs with product differentiation," remaining generally strong.

Overseas Market: The CIF import price of ADC12 remained at $2,420-2,450/mt. The import spot price fell 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, on June 19, the social inventory of secondary aluminum alloy ingots in major domestic consumption areas was 19,291 mt, an increase of 1,278 mt from last Thursday.

Summary: On Thursday, the domestic SMM ADC12 price fell by 50 yuan/mt to 20,000-20,200 yuan/mt, mainly driven by the renewed decline in aluminum prices, which led to a decrease in the prices of secondary aluminum raw materials. This, combined with insufficient new orders during the off-season and the impact of low-priced supplies on the market, jointly dragged down the ADC12 price. However, the current tight supply situation of aluminum tense scrap still supports prices on the cost side. It is expected that the ADC12 price will remain mainly adjusted within a narrow range in the short term, with continuous attention needed to changes in raw material circulation and off-season demand.

[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 solely on this information. Any decisions made by clients are unrelated to SMM.]

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