Social inventory of aluminum alloy ingots exceeds 30,000 mt, with Foshan and Ningbo being the main contributors to the increase. Secondary aluminum prices unlikely to break out of rangebound fluctuations in the short term [SMM Morning Comment on Cast Alumi

Published: Jul 18, 2025 09:13

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[SMM Morning Comment on Cast Aluminum Alloy: Social Inventory of Aluminum Alloy Ingots Exceeds 30,000 mt, with Foshan and Ningbo as the Main Contributors to the Increase; Secondary Aluminum Prices Unlikely to Break Out of Fluctuation Rangebound in the Short Term] Following the significant drop in aluminum prices on Monday, there was a slight rebound for three consecutive days starting from Tuesday, with a cumulative increase of 100 yuan/mt. However, the secondary aluminum market struggled to catch up, and prices remained stable. On Thursday, the SMM ADC12 price remained unchanged at 20,000 yuan/mt. As the aluminum price decline was greater than that of ADC12, the price spread between the two narrowed WoW. In the short term, aluminum prices are expected to remain in the doldrums, and with the support of aluminum scrap costs, the price spread is expected to narrow further.

7.18 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy ad2511 contract opened at the day's low of 19,810 yuan/mt overnight, fluctuated upward, and closed at the day's high of 19,845 yuan/mt, forming a bullish candlestick. It rose 55 yuan/mt (0.28%) from the previous trading day. Trading volume stood at 1,045 lots, while open interest reached 8,249 lots, with bears dominating the position reduction.

Spot-Futures Price Spread Report: According to SMM data, on July 17, the spot price of SMM ADC12 showed a theoretical premium of 160 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2511) at 10:15 am.

Aluminum Scrap: On Thursday, spot primary aluminum rose slightly by 50 yuan/mt from the previous trading day, with SMM A00 spot aluminum closing at 20,570 yuan/mt. The aluminum scrap market remained flat overall. Baled UBC was quoted at 15,200-15,700 yuan/mt (ex-tax), while shredded aluminum tense scrap traded at 15,900-17,400 yuan/mt (ex-tax). This week, the aluminum scrap market will continue to hover at highs, with persistent product differentiation and regional disparities. Shredded aluminum tense scrap is strongly supported by tight supply, with price resilience expected to persist, likely fluctuating rangebound between 15,500-17,000 yuan/mt. Baled UBC may dip to 15,000-15,500 yuan/mt due to weak off-season demand.

Overseas Market: Imported ADC12 CIF offers held steady at $2,460-2,490/mt, while imported spot prices stabilized around 19,300 yuan/mt, with immediate import losses at approximately 900 yuan/mt. Local ADC12 ex-tax offers in Thailand concentrated at 82-83 baht/kg.

Inventory: According to SMM statistics, on July 17, social inventory of secondary aluminum alloy ingots in major domestic consumption areas totaled 30,298 mt, up 3,532 mt WoW. Foshan contributed the main increment with an increase of 1,983 mt, followed by Ningbo with 1,398 mt.

Summary: After Monday's sharp decline, aluminum prices rebounded slightly for three consecutive days from Tuesday, cumulatively rising 100 yuan/mt. However, the secondary aluminum market struggled to catch up, with prices remaining stable. On Thursday, SMM ADC12 prices held flat at 20,000 yuan/mt. As aluminum prices fell more than ADC12, the price spread narrowed WoW. In the short term, aluminum prices are expected to be in the doldrums. Supported by scrap aluminum costs, the spread may narrow further, but weak demand and high social inventory will limit ADC12's upside room. Secondary aluminum alloy prices are likely to fluctuate rangebound in the near term.

[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 as a substitute for independent judgment. Any decisions made by clients are unrelated to SMM.]

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Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM‘s internal database model. They are for reference only and do not constitute decision-making recommendations.

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