Bullish and bearish factors intertwine, aluminum alloy prices remain rangebound [SMM morning comment on cast aluminum alloy]

SMM Morning Comment on Cast Aluminum Alloy on July 3

Futures Market: Overnight, the most-traded AD2511 cast aluminum alloy futures contract opened at the lowest price of 19,945 yuan/mt, surged significantly at the opening, reaching a high of 20,075 yuan/mt, and finally closed at 20,050 yuan/mt, up 30 yuan/mt or 0.15% from the previous close. Trading volume stood at 730 lots, with open interest at 8,878 lots, mainly driven by bulls increasing their positions.    

Spot-Futures Price Spread Daily Report: According to SMM data, on July 29, 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: Yesterday, the spot price of primary aluminum fell by 40 yuan/mt from the previous trading day. SMM A00 spot aluminum closed at 20,620 yuan/mt, with the aluminum scrap market remaining generally stable. Baled UBC aluminum scrap was concentratedly quoted at 15,300-15,900 yuan/mt (tax not included), while shredded aluminum tense scrap was concentratedly quoted at 15,800-17,300 yuan/mt (tax not included). Regionally, Shanghai, Jiangsu, Shandong, and other places closely followed aluminum price movements, with price adjustments ranging from 0 to 50 yuan/mt. Foshan, Hunan, Guizhou, and other places lagged behind aluminum price movements, with quoted prices remaining unchanged MoM. In Jiangxi, all types of wrought aluminum alloy scrap saw a 100 yuan/mt decrease yesterday, with price adjustments being delayed. 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 persists, coupled with continued weak off-season demand, limiting the upside room for aluminum scrap prices. However, tight raw material supply still provides medium and long-term bottom support.

Silicon Metal: In terms of prices, yesterday, SMM east China oxygen-blown #553 silicon was quoted at 9,700-9,800 yuan/mt, and #441 silicon at 9,900-10,100 yuan/mt. Affected by significant fluctuations in futures market prices, the difference between high and low quotes from silicon suppliers within the day exceeded 400 yuan/mt. Strong capital speculation led to considerable fluctuations in market prices, with downstream users purchasing as needed. In terms of production, silicon metal production in August is expected to increase both in supply and demand compared to July, with attention paid to the progress of new production resumptions.

Overseas Market: Overseas ADC12 quotes remained stable at 2,460-2,480 US dollars/mt, with imported spot prices remaining unchanged at around 19,300 yuan/mt, maintaining an immediate loss status for imports. Local ADC12 quotes in Thailand (tax not included) were concentrated at 82-83 baht/kg.

Inventory: According to SMM statistics, on July 30, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 31,227 mt, up 291 mt from the previous trading day and 2,147 mt from Wednesday last week.

Summary: On Tuesday, aluminum prices fluctuated rangebound, with the secondary aluminum market remaining stable. SMM ADC12 prices held steady at 20,100 yuan/mt. Recently, end-use consumption has been sluggish, with actual transactions remaining sluggish amid weak demand. However, the sustained high purchase prices of aluminum scrap have provided support for prices. Overall, cost support will continue to limit the downside room for prices, while elevated social inventory and persistently sluggish actual demand will suppress the upside room. ADC12 prices are expected to maintain a fluctuate rangebound pattern in the short term.

[Data source statement: Except for publicly available information, other data are derived from public information, market exchanges, and processed by SMM based on its internal database model, for reference only and not constituting decision-making advice.]