The price difference between A00 aluminum and aluminum scrap has slightly contracted, and social inventory of aluminum alloy ingots has accelerated its accumulation [SMM morning comment on cast aluminum alloy]

7.25 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy ad2511 contract opened at 20,135 yuan/mt overnight, hitting a high of 20,205 yuan/mt and a low of 20,110 yuan/mt, eventually closing flat at 20,135 yuan/mt. Trading volume stood at 1,132 lots with open interest at 9,210 lots, mainly driven by bulls' position increase.

Basis Report: According to SMM data, the spot price of SMM ADC12 showed a theoretical premium of 105 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2511) at 10:15 am on July 24.

Aluminum scrap: On Thursday, spot primary aluminum prices fell by 130 yuan/mt WoW, with SMM A00 spot aluminum closing at 20,720 yuan/mt, dragging down the overall aluminum scrap market. Baled UBC scrap prices were quoted at 15,350-15,850 yuan/mt (ex-tax), while shredded aluminum tense scrap prices ranged 15,800-17,300 yuan/mt (ex-tax). Regionally, Shanghai, Jiangsu, and Shandong adjusted prices closely following aluminum price movements (50-100 yuan/mt), while Guizhou and Hunan lagged behind due to wait-and-see sentiment. Price spreads: The price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan narrowed by 12 yuan/mt to 1,864 yuan/mt, while the spread for mechanical casting aluminum scrap in Shanghai shrank 22 yuan/mt to 1,928 yuan/mt. The aluminum scrap market may fluctuate at highs this week following aluminum prices, with medium and long-term cost support from raw material undersupply, though weak off-season demand will continue capping upside room.

Overseas market: Overseas ADC12 prices softened slightly, currently at $2,460-2,480/mt. Import spot prices remained around 19,500 yuan/mt with narrowed immediate import losses. Thailand's local ADC12 ex-tax quotes concentrated at 82-83 baht/kg.

Inventory: SMM data showed China's mainstream consumption areas held 32,555 mt of secondary aluminum alloy ingot social inventory on July 24, up 2,257 mt WoW. Foshan (up 871 mt), Wuxi (up 800 mt), and Ningbo (up 586 mt) contributed most increments.

Summary: Thursday's extended aluminum price decline created divergence in the secondary aluminum market. Some firms held quotes steady due to cost support and critically low finished product inventories under strong reluctance to sell, while others cut offers by 100 yuan/mt following weak demand. Short-term costs still support ADC12 prices, but high social inventories of secondary aluminum alloys—with some east China warehouses overloaded—plus sluggish actual demand and poor shipments will constrain price movements. ADC12 prices may maintain a fluctuating trend rangebound in the near term.

[Data Source Statement: Except for public information, other data are derived from public sources, market exchanges, and SMM's internal database models for reference only, not constituting decision-making advice.]