The most-traded aluminum contract slightly declines, and may maintain a narrow range of weakness in the doldrums in the short term [SMM Morning Comment on Cast Aluminum Alloy]

8.5 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy ad2511 futures contract opened at 19,915 yuan/mt overnight, hit a high of 19,940 yuan/mt, and finally closed at the day's low of 19,865 yuan/mt, down 65 yuan/mt (0.33%) from the previous close. Trading volume stood at 388 lots, while open interest reached 8,241 lots, with bulls dominating the position reduction.

Spot-Futures Price Spread Report: According to SMM data, on August 4, 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 futures contract (AD2511) at 10:15 am.

Aluminum scrap: Spot primary aluminum prices fell 40 yuan/mt on Monday compared to the previous trading day, with SMM A00 spot aluminum closing at 20,480 yuan/mt. Aluminum scrap market prices remained flat overall. Baled UBC was quoted at 15,150-15,650 yuan/mt (ex-tax), while shredded aluminum tense scrap (water price) was quoted at 16,700-17,200 yuan/mt (ex-tax). The price center of aluminum scrap may further retreat to off-season levels this week. Persistent bearish expectations for primary aluminum (such as macro pressure and high inventory) coupled with sustained weak off-season demand continue to limit the upside room for aluminum scrap. However, tight raw material supply still provides medium and long-term bottom support. Shredded aluminum tense scrap, supported by supply-side factors, shows stronger price resilience and is expected to fluctuate rangebound at 16,500-17,000 yuan/mt (ex-tax). Baled UBC faces significant downward pressure due to sluggish end-use demand, with prices likely to test 15,000-15,500 yuan/mt (ex-tax).

Silicon metal: Silicon metal prices continued to weaken on Monday, with recent spot price fluctuations being relatively volatile. SMM oxygen-blown #553 silicon in east China was quoted at 9,300-9,600 yuan/mt, down 250 yuan/mt from the previous day, while #441 silicon was quoted at 9,700-9,800 yuan/mt, down 200 yuan/mt. The most-traded SI2509 futures contract was in the doldrums during the day, opening at 8,490 yuan/mt, hitting a high of 8,490 yuan/mt and a low of 8,225 yuan/mt, before closing at 8,360 yuan/mt, down 140 yuan/mt from last Friday. The futures market has weakened for four consecutive trading days, with basis quotes from futures-spot traders remaining largely unchanged while absolute prices declined. Most traders followed the downward trend in their quotations, though silicon enterprises showed mixed pricing sentiment with varying price levels. Warrant data showed that the Guangzhou Futures Exchange's silicon metal warrants stood at 50,312 lots, down 204 lots from the previous day.

Overseas market: Overseas ADC12 prices held steady at $2,460-2,480/mt, while import spot prices remained flat around 19,300 yuan/mt, maintaining an immediate loss-making state. Local ADC12 ex-tax prices in Thailand 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 totaled 31,346 mt on August 4, down 109 mt from the previous trading day—marking the first decline since May 12—but up 1,039 mt from the previous Monday (July 28).

Summary: Aluminum prices continued to retreat on Monday, while aluminum scrap quotations remained firm temporarily. However, the downtrend in silicon prices persisted, with oxygen-blown #553 silicon prices dropping by 250 yuan/mt WoW to 9,450 yuan/mt on Friday. Cost support for secondary aluminum alloy further weakened. Meanwhile, recent end-use consumption remained sluggish, with some downstream operations affected by high temperatures, leading to order reductions at secondary aluminum plants and sluggish market transactions. Nevertheless, aluminum scrap supply remained tight in the short term, with high costs still providing some price support. Overall, cost support will continue to limit downside room, while high social inventory and persistently weak actual demand suppress upside potential. ADC12 prices are expected to remain in the doldrums within a narrow range in the near term.

[Data source statement: Data other than public information is processed by SMM based on public information, market exchanges, and SMM's internal database model, for reference only and not constituting decision-making advice.]