Overnight, cast aluminum alloy closed slightly higher, with short-term macro factors providing bullish support to drive up prices [SMM morning comment on cast aluminum alloy]

7.23 SMM Cast Aluminum Alloy Morning Comment

Futures market: Overnight, the most-traded cast aluminum alloy ad2511 contract opened at 20,300 yuan/mt, peaked at 20,350 yuan/mt, bottomed at 20,265 yuan/mt, and closed at 20,290 yuan/mt, up 10 yuan/mt (0.05%) from the previous trading day. Trading volume stood at 1,296 lots, open interest at 9,907 lots, with bears dominating position reductions.

Spot-futures price spread report: According to SMM data, on July 22, the spot price of SMM ADC12 showed a theoretical premium of 115 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2511) at 10:15 am.

Aluminum scrap side: On Tuesday, spot primary aluminum prices rose 50 yuan/mt from the previous trading day, with SMM A00 spot aluminum closing at 20,940 yuan/mt. The aluminum scrap market broadly followed the uptrend. Yesterday, baled UBC was quoted at 15,500-16,000 yuan/mt (tax excluded), shredded aluminum tense scrap at 16,000-17,500 yuan/mt (tax excluded). Regionally, Shanghai, Jiangsu, and Shandong closely tracked aluminum price movements with adjustments of 50-100 yuan/mt, while Guizhou, Hunan, and Anhui lagged behind with flat quotes amid growing fear of high prices. Price difference between A00 aluminum and aluminum scrap: The Foshan price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint widened by 50 yuan/mt to 1,956 yuan/mt, while the Shanghai price difference between A00 aluminum and mechanical casting aluminum scrap narrowed by 4 yuan/mt to 1,932 yuan/mt.

Overseas market: Import ADC12 CIF quotes remained stable at $2,460-2,490/mt. Import spot prices rose to around 19,500 yuan/mt, coupled with RMB appreciation, narrowing import losses further. Thailand's domestic ADC12 tax-exclusive quotes concentrated at 82-83 baht/kg.

Inventory side: SMM data showed that on July 22, the combined daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 28,777 mt, up 100 mt from the previous trading day and 1,184 mt WoW.

Conclusion: On Wednesday, SMM ADC12 prices rose 50 yuan/mt to 20,250 yuan/mt. Recent sustained aluminum price increases drove broad-based scrap aluminum rallies, further elevating ADC12 production costs and fueling market adjustment sentiment. However, actual consumption showed mediocre performance with limited transactions. Overall, while scrap aluminum costs strengthened short-term support for secondary aluminum prices, weak demand coupled with high social inventories will constrain upside room for ADC12 and other secondary aluminum alloys, which are expected to maintain a narrowly strong trend in the near term.

[Data source statement: Except for publicly available information, other data are derived from public information, market exchanges, and SMM's internal database models for processing purposes, serving as references only without constituting decision-making advice.]