The most-traded contract fell slightly overnight, and it is difficult to change the short-term rangebound fluctuation of ADC12 prices [SMM Morning Comment on Cast Aluminum Alloy]

SMM Morning Comment on Cast Aluminum Alloy on July 24

Futures Market: The most-traded AD2511 cast aluminum alloy futures contract opened at 20,150 yuan/mt overnight, reaching a high of 20,210 yuan/mt and a low of 20,105 yuan/mt, before closing at 20,140 yuan/mt. This represented a drop of 15 yuan/mt or 0.07% from the previous trading day. Trading volume stood at 787 lots, with open interest at 9,411 lots. Bulls mainly reduced their positions.    

Spot-Futures Price Spread Daily Report: According to SMM data, on July 23, the SMM ADC12 spot price was at a theoretical premium of 95 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 a.m.

Aluminum Scrap: On Wednesday, the spot price of primary aluminum fell by 90 yuan/mt from the previous trading day. SMM A00 spot aluminum closed at 20,850 yuan/mt, with the aluminum scrap market generally following the decline. Baled UBC aluminum scrap was concentratedly quoted at 15,450-15,950 yuan/mt (tax not included) yesterday, while shredded aluminum tense scrap was quoted at 15,900-17,400 yuan/mt (tax not included). Regionally, Shanghai, Jiangsu, Shandong, and other regions closely followed aluminum price movements, with price adjustments ranging from 50-100 yuan/mt. In Guizhou, Hunan, and other regions, price adjustments lagged behind aluminum price movements, as they chose to wait and see the previous day without adjusting prices, resulting in yesterday's quotes remaining flat MoM. It is expected that the aluminum scrap market this week may follow aluminum prices in fluctuating at highs, with overall prices more likely to rise than fall. The undersupply of raw materials provides medium- and long-term support for aluminum scrap prices, but weak demand during the off-season will also continue to constrain upside room.

Overseas Market: Overseas ADC12 quotes have slightly softened, currently adjusted down slightly to $2,460-2,480/mt. The import spot price remains around 19,500 yuan/mt, with immediate import losses narrowing slightly. Local ADC12 quotes in Thailand (tax not included) are concentrated at 82-83 Thai baht/kg.

Inventory: According to SMM statistics, on July 23, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 29,080 mt, an increase of 303 mt from the previous trading day and 1,084 mt from Wednesday last week.

Summary: On Wednesday, aluminum prices ended their consecutive gains, with secondary aluminum market prices generally holding steady. The SMM ADC12 price remained stable at 20,250 yuan/mt. The current price remains firm, partly due to the supportive role of the cost side. The aluminum scrap market remains tight, leading to high procurement prices for manufacturers and difficulties in restocking. On the other hand, affected by factors such as undersupply of raw materials, a decline in enterprise operating rates, and concentrated spot and futures deliveries, manufacturers' finished product inventories have decreased, further exacerbating the tight supply situation and fostering enterprises' reluctance to budge on prices. In the short term, costs still support the ADC12 price, but the current high social inventory of secondary aluminum alloy, with some warehouses in east China reaching capacity, coupled with weak actual demand and sluggish shipments, restricts the subsequent price upside. It is expected that the ADC12 price will maintain a narrow rangebound fluctuation in the short term.

[Data Source Statement: Data other than publicly available information are derived from public information, market exchanges, and SMM's internal database model, processed by SMM for reference only and do not constitute decision-making advice.]