The most-traded cast aluminum alloy futures contract breaks through the 20,000 mark, with costs boosting spot prices [SMM Morning Comment on Cast Aluminum Alloy]

7.11 SMM Morning Comment on Cast Aluminum Alloy

Futures Market: Overnight, the most-traded AD2511 cast aluminum alloy futures contract opened at 19,945 yuan/mt, reaching a high of 20,050 yuan/mt and a low of 19,915 yuan/mt, before closing at 20,015 yuan/mt, up 75 yuan/mt or 0.38% from the previous trading day. Trading volume stood at 1,480 lots, with open interest at 9,082 lots, primarily driven by an increase in long positions. 

Spot-Futures Price Spread Daily Report: According to SMM data, on July 10, the SMM ADC12 spot price was at a theoretical premium of 145 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 a.m.

Aluminum Scrap: On Thursday, the spot price of primary aluminum rose by 160 yuan/mt from the previous trading day, with SMM A00 spot aluminum closing at 20,820 yuan/mt. The aluminum scrap market prices generally continued to rebound. By product, baled UBC prices rebounded by 50 yuan/mt MoM, slightly following the aluminum price increase. Regionally, Shanghai, Jiangsu, Shandong, and other regions closely followed aluminum price movements, with price adjustments ranging from 100-150 yuan/mt. In Guizhou, Hunan, Guangdong, Jiangxi, and other regions, price adjustments lagged behind aluminum price movements, with quotes remaining flat. According to secondary aluminum enterprises, the current low prices of secondary aluminum alloys, coupled with the difficulty in scrap recycling, and constrained by poor production starts, limit the upside room for price increases. This week, the aluminum scrap market is expected to hover at highs, with cautious price adjustments. Shredded aluminum tense scrap, supported by tight supply, has strong price resilience and is expected to fluctuate rangebound within the 15,800-17,400 yuan/mt range. Baled UBC may continue its downward trend due to off-season demand pressure, possibly dipping to 15,200-15,700 yuan/mt. Subsequent attention should be paid to marginal changes in raw material circulation and signals of terminal order recovery.

Overseas Market: The CIF import price of ADC12 remained at 2,450-2,480 US dollars/mt, with the import spot price hovering around 19,200 yuan/mt, and immediate import losses maintained at around 900 yuan/mt. The local tax-excluded price of ADC12 in Thailand was concentrated at 82-83 Thai baht/kg.

Inventory: According to SMM statistics, on July 10, the social inventory of secondary aluminum alloy ingots in major domestic consumption areas was 26,766 mt, an increase of 3,534 mt from the previous Thursday. Among them, Foshan region saw an increase of 1,896 mt, and Ningbo region saw an increase of 1,688 mt, contributing the most to the overall increase.

Summary: On Thursday, aluminum prices extended their gains, with SMM ADC12 prices rising by 100 yuan/mt to 20,100 yuan/mt. Recently, both domestic and overseas aluminum scrap supplies have tightened, directly leading to a significant increase in the difficulty of raw material procurement for secondary aluminum plants. The competition for "scrap" in the market has intensified, while production costs continue to rise, and the scope of enterprise production losses continues to expand, prompting manufacturers to raise their quotes. Constrained by both raw material shortages and weakening demand, multiple secondary aluminum manufacturers have been forced to cut production, with some even entering a state of shutdown. Overall, the ongoing balance between strong cost support and weak demand suppression is expected to persist, with ADC12 prices maintaining a rangebound fluctuation pattern in July.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should exercise caution in decision-making and not use this as a replacement for independent judgment. Any decisions made by clients are not related to SMM.]

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