Cost support for cast aluminum alloy becomes prominent, with prices rising positively [SMM Morning Comment on Cast Aluminum Alloy]

SMM Cast Aluminum Alloy Morning Comment on August 7

Futures: Overnight, the most-traded AD2511 cast aluminum alloy futures contract opened at 20,160 yuan/mt, with a high of 20,210 yuan/mt, a low of 20,120 yuan/mt, and closed at 20,175 yuan/mt, up 100 yuan/mt or 0.50% from the previous close. Trading volume stood at 916 lots, with open interest at 8,456 lots, primarily driven by bulls increasing their positions.    

Spot-Futures Price Spread Daily Report: According to SMM data, on August 6, the SMM ADC12 spot price was at a theoretical premium of 110 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 a.m.

Aluminum Scrap: On Wednesday, the spot price of primary aluminum fell by 110 yuan/mt from the previous trading day, with SMM A00 spot aluminum closing at 20,630 yuan/mt. The overall aluminum scrap market prices rose. Baled UBC aluminum scrap was quoted at 15,350-15,850 yuan/mt (tax not included), while shredded aluminum tense scrap (with water content) was quoted at 17,000-17,500 yuan/mt (tax not included). Baled UBC aluminum scrap rose by 100 yuan/mt MoM, and shredded aluminum tense scrap (with water content) rose by 200 yuan/mt MoM. Prices for automobile and motorcycle wheel hubs surged by 300 yuan/mt. According to producers, there are two reasons for this: firstly, the shortage of aluminum scrap intensified in August, making it increasingly difficult to procure raw materials; secondly, producers are currently in a policy transition period, leading to increased procurement costs for raw materials. This week, the price center of the aluminum scrap market should have further aligned with off-season levels. However, due to the impact of the policy transition period related to secondary aluminum, it may instead push up the prices of raw material procurement. The supply of shredded aluminum tense scrap (with water content) is expected to remain tight, with prices fluctuating within the range of 17,000-17,500 yuan/mt (tax not included). Baled UBC aluminum scrap is still constrained by weak end-use demand, with prices fluctuating within the range of 15,300-15,800 yuan/mt (tax not included).

Silicon Metal: (1) Futures Market: On August 6, the most-traded silicon metal futures contract held steady before holding up well, opening at 8,435 yuan/mt, with a high of 8,780 yuan/mt, a low of 8,350 yuan/mt, and closing at 8,680 yuan/mt, up 315 yuan/mt or 3.77% from the previous trading day. The wide fluctuations in futures prices had a strong impact on the spot market, with most silicon suppliers adjusting their quotes in line with the futures market. Spot prices rose in the afternoon compared to the morning, with transactions in the silicon metal market made on a need-based basis. (2) Spot Market: On August 6, SMM east China non-oxygen blown #553 silicon metal was priced at 9,000-9,200 yuan/mt; oxygen-blown #553 at 9,100-9,400 yuan/mt; #521 at 9,400-9,600 yuan/mt; #441 at 9,500-9,600 yuan/mt; #421 at 9,500-9,900 yuan/mt; #421 silicone at 10,200-10,600 yuan/mt; and #3303 at 10,700-10,900 yuan/mt. Silicon metal prices in some areas of Tianjin rose. Prices in Kunming, Huangpu Port, north-west China, Xinjiang, Sichuan, and Shanghai also remained stable.

Overseas market: Overseas ADC12 prices held steady at $2,460-2,480/mt, while import spot prices rose to around 19,500 yuan/mt, maintaining an immediate loss status for imports. Local ADC12 prices in Thailand (excluding tax) concentrated at 82-83 baht/kg.

Inventory side: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 31,219 mt on August 6, down 63 mt from the previous trading day and 8 mt WoW (July 30).

Summary: Aluminum prices extended gains on Wednesday. Tight aluminum scrap supply amid reduced new scrap output during the off-season and high temperatures restraining dismantling activities drove rapid price increases. Secondary aluminum producers faced rising cost pressures, strengthening their willingness to adjust prices. The market generally raised prices by 100 yuan/mt yesterday, with SMM ADC12 prices climbing 100 yuan/mt to 20,150 yuan/mt. However, demand side, downstream operations were dragged down by high temperatures, leading to order reductions at secondary aluminum plants and sluggish market transactions. Overall, cost support will continue to limit downside room, while elevated social inventories and persistently weak actual demand suppress upside potential. ADC12 prices are expected to fluctuate rangebound 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.]