Both automobile and motorcycle production at terminals increased in June, while demand support became increasingly weaker in July [SMM morning comment on cast aluminum alloy]

SMM Morning Comment on Cast Aluminum Alloy on July 15

Futures Market: Overnight, the most-traded AD2511 cast aluminum alloy futures contract opened at 19,790 yuan/mt, reaching a high of 19,810 yuan/mt and a low of 19,720 yuan/mt, before closing at 19,800 yuan/mt. This represented a decrease of 5 yuan/mt or 0.03% from the previous trading day. Trading volume stood at 831 lots, with open interest at 8,334 lots. Bears were the main force in increasing positions.

Spot-Futures Price Spread Daily Report: According to SMM data, on July 14, the SMM ADC12 spot price was at a theoretical premium of 125 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 a.m.

Industry News: (1) According to data from the China Motorcycle Chamber of Commerce, in June, motorcycle production and sales reached 1.8666 million units and 1.8586 million units, respectively. Production increased by 1% MoM, while sales decreased by 0.97% YoY and increased by 4.79% and 3.24% MoM, respectively. From January to June, motorcycle production and sales totaled 10.6141 million units and 10.6146 million units, respectively, with YoY increases of 11.83% and 11.54% in production and sales, respectively. (2) According to data from CAAM, in June, automobile production and sales reached 2.794 million units and 2.904 million units, respectively, with MoM increases of 5.5% and 8.1%, and YoY increases of 11.4% and 13.8%, respectively. From January to June, automobile production and sales reached 15.621 million units and 15.653 million units, respectively, with YoY increases of 12.5% and 11.4% in production and sales, respectively. In June, NEV production and sales reached 1.268 million units and 1.329 million units, respectively, with YoY increases of 26.4% and 26.7%, respectively. NEV sales accounted for 45.8% of total new vehicle sales.

Aluminum Scrap Market: Yesterday, the spot primary aluminum price fell by 320 yuan/mt from the previous trading day. SMM A00 spot aluminum closed at 20,470 yuan/mt, with the aluminum scrap market generally following the decline. By product, baled UBC prices fell by 250 yuan/mt from last Friday, basically following the aluminum price decline. By region, Shanghai, Jiangsu, Shandong, and other regions closely followed aluminum price movements, with price adjustments ranging from 200-300 yuan/mt. Hunan, Guangdong, Jiangxi, Anhui, and other regions lagged behind aluminum price movements, with price adjustments ranging from 100-200 yuan/mt. It is expected that the aluminum scrap market will continue to fluctuate at highs this week, with product differentiation and regional differences persisting. Shredded aluminum tense scrap is expected to maintain price resilience due to strong supply constraints, with prices likely to fluctuate rangebound within 15,500-17,000 yuan/mt. Baled UBC is under significant downward pressure due to weak demand during the off-season, with prices possibly falling to 15,000-15,500 yuan/mt.

Overseas Market: The CIF import price of ADC12 slightly increased to $2,460-$2,490/mt. The import spot price decreased by 100 yuan/mt to around 19,300 yuan/mt, with the immediate import loss widening again to around 900 yuan/mt. The local tax-free 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 26,680 mt on July 14, increasing by 1,367 mt from the previous trading day and 3,962 mt WoW.

Summary: Aluminum prices plummeted on Monday, but limited declines in raw material costs due to tight supply provided certain support for ADC12 prices, with most quotes adjusted downward by 100 yuan/mt. A minority of manufacturers maintained firm quotations amid cost pressure, and SMM ADC12 prices fell 100 yuan/mt WoW to 20,000 yuan/mt. However, sluggish demand persisted, with orders at secondary aluminum enterprises dropping significantly compared to June. Constrained by both raw material shortages and weakening demand, multiple secondary aluminum producers have been forced to reduce production, with some even halting operations. Overall, strong cost support and weak demand suppression continue to balance, and ADC12 prices are expected to fluctuate rangebound throughout July.

[The information provided is for reference only. This article does not constitute direct advice for investment research decisions. Clients should exercise caution and avoid relying on this as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]

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