In June, the PMI of the secondary aluminum industry remained in contraction territory [SMM morning comment on cast aluminum alloy]

SMM Morning Comment on Cast Aluminum Alloy on June 30

Futures Market: On the night of last Friday, the most-traded AD2511 futures contract for cast aluminum alloy opened higher at 19,835 yuan/mt, then pulled back to around 19,800 yuan/mt, hitting a low of 19,780 yuan/mt, and finally closed at 19,785 yuan/mt, down 5 yuan/mt or 0.03% from the previous trading day. Trading volume stood at 841 lots, and open interest at 8,247 lots, with bears mainly increasing their positions.

Industry Dynamics: According to SMM data, the PMI for the secondary aluminum industry in June rose slightly to 45.0% MoM from May, but still remained below the 50 mark, indicating that the industry was in contraction territory.

Basis Daily Report: According to SMM data, on June 27, the theoretical premium of SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 narrowed to 280 yuan/mt.

Aluminum Scrap: On last Friday, spot primary aluminum surged 280 yuan/mt from the previous trading day, with SMM A00 spot closing at 20,890 yuan/mt. The aluminum scrap market prices generally followed the rise, but the increase was limited. By product, baled UBC and shredded aluminum tense scrap rose slightly by 100 yuan/mt from the previous day, while wrought aluminum alloy scrap new scrap and clean tapping aluminum wire rose by 200 yuan/mt, closely following the rise of primary aluminum. In terms of the price difference between A00 aluminum and aluminum scrap, the price difference between mechanical casting aluminum scrap and A00 aluminum in Shanghai expanded by 8 yuan/mt MoM to 1,848 yuan/mt, and the price difference between green extrusion and A00 aluminum in Foshan expanded by 180 yuan/mt from the previous day to 1,738 yuan/mt. Considering the difficulty in actual shipments, aluminum scrap suppliers adopted a cautious wait-and-see attitude towards price adjustments amid the high-level fluctuation of aluminum prices. The aluminum scrap market is expected to continue fluctuating at highs next week.

Overseas Market: The CIF import price of ADC12 rose slightly to $2,450-2,470/mt, the import spot price increased by 100 yuan/mt to around 19,300 yuan/mt, and the import instant loss was in the range of 700-800 yuan/mt. The local tax-excluded price of ADC12 in Thailand was concentrated at 82-83 Thai baht/kg.

Inventory: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 19,523 mt on June 27, an increase of 236 mt from the previous trading day.

Summary: Driven by the rise in aluminum prices last Friday, the cost of aluminum scrap generally increased, and the market had a strong willingness to raise prices. SMM ADC12 prices were raised by 100 yuan/mt to 20,000-20,200 yuan/mt. However, overall trading remained weak, and downstream enterprises mostly maintained just-in-time procurement. As July approaches, the lack of growth in terminal orders will continue to suppress the upside room of ADC12 prices, but cost support is relatively strong, providing a floor for prices. In the short term, with no signs of improvement in consumption and the deepening impact of the off-season, ADC12 prices are expected to maintain a narrow rangebound fluctuation pattern.

[The information provided is for reference only. This article does not constitute direct advice for investment research and decision-making. Clients should make cautious decisions and should not rely on this to replace their own independent judgment. Any decisions made by clients are unrelated to SMM.】

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