Differentiation among aluminum scrap varieties intensifies, silicon metal holds up well, and the tug-of-war between cost and demand for secondary aluminum continues [SMM Morning Comment on Cast Aluminum Alloy] [SMM Morning Comment on Cast Aluminum Alloy]

SMM Morning Comment on Cast Aluminum Alloy on July 28

Futures Market: On the night of last Friday, the most-traded AD2511 futures contract for cast aluminum alloy opened at 20,110 yuan/mt, reaching a high of 20,170 yuan/mt and a low of 19,980 yuan/mt, before closing at 19,995 yuan/mt. This represented a decrease of 140 yuan/mt or 0.70% from the previous close. Trading volume stood at 1,688 lots, with open interest at 9,161 lots, primarily due to bulls reducing their positions.    

Spot-Futures Price Spread Daily Report: According to SMM data, on July 25, the SMM ADC12 spot price was theoretically at a premium of 70 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 a.m.

Aluminum Scrap Market: On last Friday, the spot price of primary aluminum fell by 60 yuan/mt from the previous trading day, with SMM A00 spot closing at 20,780 yuan/mt. The aluminum scrap market generally followed the upward trend. Baled UBC aluminum scrap was concentratedly quoted at 15,400-15,900 yuan/mt (tax not included), while shredded aluminum tense scrap was quoted at 15,800-17,300 yuan/mt (tax not included). It is expected that the aluminum scrap market will continue to be in the doldrums this week, with the price center returning to off-season levels. The bearish outlook for primary aluminum remains, coupled with sustained weak demand during the off-season, limiting the upside room for aluminum scrap overall. However, tight raw material supply still provides medium and long-term bottom support. The pattern of product differentiation continues: shredded aluminum tense scrap, supported by tight supply, exhibits strong price resilience, fluctuating rangebound within 15,600-17,200 yuan/mt (tax not included). Baled UBC aluminum scrap, due to weak end-use demand, faces significant downward pressure, with prices possibly dipping to 15,000-15,500 yuan/mt (tax not included).

Silicon Metal Market: Last week, spot and futures prices of silicon metal continued to hold up well. As of last Friday, east China oxygen-blown #553 silicon was priced at 10,000-10,200 yuan/mt, and #441 silicon at 10,200-10,400 yuan/mt. Over the past month, the spot price of silicon metal has surged by nearly 2,000 yuan/mt per ton, improving the profits of silicon enterprises in production. Both supply and demand for silicon metal have increased, with attention focused on the incremental production resumptions on the supply side.

Overseas Market: Overseas ADC12 quotes have slightly softened, currently adjusted downwards 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, excluding tax, are concentrated at 82-83 baht/kg.

Inventory: According to SMM statistics, on July 28, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 30,911 mt, an increase of 605 mt from the previous trading day and 2,234 mt from Monday of last week.

Summary: On last Friday, aluminum prices rebounded rangebound, with the secondary aluminum market maintaining stable quotes. The SMM ADC12 price held steady at 20,200 yuan/mt. Recently, aluminum scrap prices have continued to rise alongside aluminum prices due to tight supply. Silicon prices have surged significantly, stimulated by macro policy factors. The simultaneous upward movement of aluminum scrap and auxiliary material prices has jointly driven up the production costs of secondary aluminum plants. Demand side remained weak, with some downstream sectors entering high-temperature holidays, and sluggish end-use consumption reducing acceptance of high prices and capping price increases. Overall, cost-side support persists, while high social inventory and weak demand will limit upside room. ADC12 prices are expected to fluctuate rangebound 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 not constituting decision-making advice.]