Weakened cost support coupled with sluggish demand, ADC12 aluminum alloy prices consolidate weakly [SMM morning comment on cast aluminum alloy]

8.4 SMM Morning Comment on Cast Aluminum Alloy

Futures Market: On the night of last Friday, the most-traded cast aluminum alloy AD2511 futures contract opened at 19,870 yuan/mt, with a high of 19,890 yuan/mt, a low of 19,800 yuan/mt, and closed at 19,875 yuan/mt, down 45 yuan/mt or 0.23% from the previous close. Trading volume was 608 lots, and open interest was 8,447 lots, with bears mainly increasing their positions.    

Spot-Futures Price Spread Daily Report: According to SMM data, on August 1, the SMM ADC12 spot price was at a theoretical premium of 120 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 a.m.

Aluminum Scrap: On last Friday, the spot price of primary aluminum fell by 60 yuan/mt from the previous trading day. SMM A00 spot aluminum closed at 20,520 yuan/mt, and the overall aluminum scrap market prices declined. Baled UBC aluminum scrap was quoted at 15,200-15,700 yuan/mt (tax not included), and shredded aluminum tense scrap (water price) was quoted at 16,700-17,200 yuan/mt (tax not included). Regarding the price difference between A00 aluminum and aluminum scrap, the Shanghai mechanical casting aluminum scrap price difference narrowed by 6 yuan/mt MoM to 1,944 yuan/mt, while the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan widened by 59 yuan/mt MoM to 1,998 yuan/mt. It is expected that the price center of the aluminum scrap market this week may further return to off-season levels. The bearish expectations for primary aluminum (such as macro pressure and high inventory) have not dissipated, coupled with the continued weak demand during the off-season, limiting the overall upside room for aluminum scrap. However, the tight supply of raw materials still provides medium and long-term bottom support. Shredded aluminum tense scrap is supported by the supply side, showing relatively strong price resilience.

Silicon Metal: (1) Price: Last week, the spot and futures prices of silicon metal weakened. As of last Friday, east China oxygen-blown #553 silicon metal was priced at 9,500-9,800 yuan/mt, and #441 silicon metal was priced at 9,800-10,100 yuan/mt, down about 300 yuan/mt WoW. In the futures market, the most-traded SI2509 silicon metal futures contract fluctuated considerably around 8,500-9,600 yuan/mt this week, closing at 8,500 yuan/mt on August 1, down 415 yuan/mt within the week. (2) Social Inventory: According to SMM statistics, the total social inventory of silicon metal in major regions was 540,000 mt on July 31, up 5,000 mt WoW. Among them, the social general warehouse inventory was 119,000 mt, down 1,000 mt WoW, and the social delivery warehouse inventory was 421,000 mt (including unregistered warrants and spot cargo), up 6,000 mt WoW (excluding Inner Mongolia, Gansu, etc.).

Overseas Market: Overseas ADC12 quotes held steady at $2,460-2,480/mt, with imported spot prices remaining flat 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, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi was 31,319 mt on August 1, up 93 mt from the previous trading day and up 1,434 mt from last Friday.

Summary: Aluminum prices declined for two consecutive days last week, with a cumulative drop of 150 yuan/mt, while aluminum scrap prices also moved lower. Coupled with falling prices of auxiliary materials such as copper and silicon metal, cost support for secondary aluminum alloy weakened. Meanwhile, recent end-use consumption remained sluggish, with weak demand leading to thin actual transactions and market prices generally following the downtrend. The SMM ADC12 price held steady at 20,100 yuan/mt. However, short-term aluminum scrap supply remains tight, and high costs continue to provide some price support. Overall, cost support will continue to limit downside room, while elevated social inventory and persistently sluggish actual demand will cap upside room. The ADC12 price is expected to remain in a narrow range in the doldrums 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 model, processed by SMM for reference only and not constituting decision-making advice.]