Aluminum scrap circulation tightens, coupled with weakening demand. ADC12 aluminum alloy prices remain stable temporarily, with market participants adopting a wait-and-see attitude [SMM Morning Comment on Cast Aluminum Alloy]

Published: Jul 3, 2025 09:07

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[SMM Morning Comment on Cast Aluminum Alloy: Tightened Aluminum Scrap Circulation and Weakened Demand Lead to ADC12 Prices Holding Steady for Observation] Aluminum prices rose slightly on Wednesday, but the secondary aluminum market struggled to catch up, with quotes generally holding steady. The SMM ADC12 price range remained stable at 20,000-20,200 yuan/mt. Currently, the circulation of aluminum scrap is tightening, increasing the difficulty for enterprises to procure raw materials. The off-season effect on the demand side is prominent, with some downstream enterprises beginning to reduce production due to high temperatures or declining orders, resulting in sluggish market transactions.

7.3 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy AD2511 contract opened at the day's low of 19,880 yuan/mt overnight, then fluctuated rangebound upward to hit the day's high of 19,985 yuan/mt before closing at 19,960 yuan/mt, up 75 yuan/mt (0.38%) from the previous session, marking the third consecutive day of small bullish candlesticks. Trading volume stood at 2,314 lots with open interest at 9,223 lots, mainly driven by long position increases.

Basis Report: According to SMM data, the spot-futures price spread between SMM ADC12 spot price and the most-traded cast aluminum alloy contract (AD2511) narrowed to 225 yuan/mt at 10:15 AM on July 2.

Aluminum scrap: On Wednesday, spot primary aluminum prices rose 30 yuan/mt from the previous day, with SMM A00 spot aluminum closing at 20,810 yuan/mt, while aluminum scrap market prices remained generally stable. During the traditional off-season, downstream scrap utilization enterprises showed weak order releases and maintained rigid demand-based procurement. Baled UBC was quoted at 15,300-15,800 yuan/mt (tax excluded), and shredded aluminum tense scrap at 15,800-17,300 yuan/mt (tax excluded). For price differences, the spread between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan widened by 40 yuan/mt to 1,797 yuan/mt, while the Shanghai mechanical casting aluminum scrap spread narrowed by 24 yuan/mt to 1,823 yuan/mt.

Overseas market: Imported ADC12 CIF offers held steady at $2,450-2,480/mt, with spot import prices around 19,200 yuan/mt, resulting in an immediate import loss of approximately 800 yuan/mt. Local ADC12 offers in Thailand were concentrated at 82-83 baht/kg (tax excluded).

Inventory: SMM data showed that social inventories of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 21,278 mt on July 2, up 230 mt from the previous day and 2,660 mt WoW.

Summary: Aluminum prices edged up slightly on Wednesday, but the secondary aluminum market struggled to catch up, with most offers remaining stable. SMM ADC12 prices held steady at 20,000-20,200 yuan/mt. Currently, aluminum scrap circulation is tightening, increasing raw material procurement difficulties for enterprises. The off-season effect is prominent on the demand side, with some downstream enterprises reducing production due to high temperatures or order declines, resulting in sluggish market transactions. Constrained by dual pressures of insufficient raw material supply and weakening demand, some secondary aluminum plants have initiated short-term furnace maintenance or lowered operating rates. Overall, under the combined effects of deepening off-season impacts and cost support, ADC12 prices are expected to fluctuate rangebound.

[The information provided is for reference only. This article does not constitute direct investment research advice. Clients should make prudent decisions and not use this to replace independent judgment. Any decisions made by clients are unrelated to SMM.]

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