ADC12 aluminum alloy prices remain stable; focus on demand and aluminum scrap supply in the short term [SMM morning comment on cast aluminum alloy]

8.12 SMM Morning Comment on Cast Aluminum Alloy

Futures: Overnight, the most-traded AD2511 cast aluminum alloy futures contract opened at the highest point of 20,090 yuan/mt, with the lowest point at 20,020 yuan/mt, and finally closed at 20,050 yuan/mt, down 85 yuan/mt or 0.42% from the previous close. Trading volume was 343 lots, and open interest was 8,571 lots, with bulls mainly reducing their positions.    

Spot-Futures Price Spread Daily Report: According to SMM data, on August 11, the SMM ADC12 spot price had a theoretical premium of 155 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 a.m.

Industry Dynamics: According to data from the China Association of Automobile Manufacturers (CAAM), in July, automobile production and sales reached 2.591 million units and 2.593 million units respectively, down 7.3% MoM and 10.7% MoM, but up 13.3% YoY and 14.7% YoY. Among them, the production and sales of NEVs reached 1.243 million units and 1.262 million units respectively, up 26.3% YoY and 27.4% YoY, with NEVs accounting for 48.7% of total new car sales. In July, the auto market entered the traditional off-season, with some manufacturers arranging annual equipment maintenance, leading to a slowdown in production and sales rhythms and a seasonal pullback MoM. From the perspective of the industry market environment, the effect of the trade-in policy continued to manifest, with positive progress made in the comprehensive rectification of "rat race" competition in the industry. Enterprises continued to launch new car models, contributing to the stable operation of the auto market and achieving YoY growth. Recently, the national level has allocated the third batch of ultra-long-term special treasury bonds to support the trade-in of consumer goods, and the fourth batch will be allocated as planned in October. Local governments will be urged to refine their fund usage plans to ensure the orderly and balanced use of funds until the end of the year. The clarity of national policies will help stabilize consumer confidence, continuously boost auto consumption, and ensure the stable operation of the industry in H2.

Aluminum Scrap: On Monday, the spot price of primary aluminum fell by 20 yuan/mt from the previous trading day, with SMM A00 spot aluminum closing at 20,630 yuan/mt, and the overall market price of aluminum scrap remaining stable. In the current traditional off-season, downstream scrap utilization enterprises have weak order releases, with procurement mainly based on immediate needs. On Monday, the centralized quotation for baled UBC aluminum scrap was in the range of 15,350-15,850 yuan/mt (tax not included), and the centralized quotation for shredded aluminum tense scrap (with water price) was in the range of 17,000-17,500 yuan/mt (tax not included). Baled UBC aluminum scrap fell by 50 yuan/mt MoM, while shredded aluminum tense scrap (with water price) and auto/motorcycle wheel hubs remained stable MoM.

Silicon Metal: On August 11, the SMM east China non-oxygen blown #553 silicon metal was priced at 9,100-9,300 yuan/mt; oxygen-blown #553 at 9,300-9,500 yuan/mt; #521 at 9,500-9,700 yuan/mt; #441 at 9,600-9,800 yuan/mt; #421 at 9,600-9,900 yuan/mt; #421 silicone at 10,200-10,600 yuan/mt; and #3303 at 10,700-10,900 yuan/mt. Prices of silicon in some regions including Huangpu Port, north-west China, Tianjin, Xinjiang, Sichuan, and Shanghai rose slightly. Prices in Kunming remained stable. The price of silicon (Si≥97%) also held steady today.

Overseas market: Overseas ADC12 quotations remained stable at $2,460-2,480/mt, while import spot prices hovered around 19,600 yuan/mt, maintaining an immediate loss. Local ADC12 prices in Thailand rose slightly to 82-84 baht/kg on a tax-exclusive basis.

Inventory: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 31,473 mt on August 12, up 128 mt from the previous trading day and 191 mt WoW (August 5).

Summary: Aluminum prices continued a slight correction on Monday, while secondary aluminum market quotations remained stable amid a wait-and-see approach. SMM ADC12 prices held steady at 20,250 yuan/mt. In August, the secondary aluminum market remained constrained by tight aluminum scrap supply, with persistent cost pressure supporting ADC12 prices. However, lackluster consumption may limit upside potential, and secondary aluminum alloy prices are expected to fluctuate rangebound in early August. Short-term focus will be on the recovery pace of end-use demand and improvements in aluminum scrap supply.

[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.]