Overnight, cast aluminum alloy consolidated with a slight decline; bulls mainly reduced their positions [SMM Cast Aluminum Alloy Morning Comment]

8.2 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded AD2511 contract for cast aluminum alloy opened at 20,050 yuan/mt, hit a low of 20,025 yuan/mt, and reached a high of 20,090 yuan/mt overnight. It finally closed at 20,055 yuan/mt, down 40 yuan/mt or 0.20% from the previous close. Trading volume was 549 lots, with open interest at 7,897 lots, mainly due to longs reducing their positions.

Spot-Futures Price Spread Daily Report: According to SMM data, on August 19, the theoretical premium of SMM ADC12 spot price over the closing price of the most-traded casting aluminum alloy contract (AD2511) at 10:15 am was 255 yuan/mt.

Industry Updates: (1) According to CAAM data, in July, auto production and sales were 2.591 million and 2.593 million units, up 13.3% and 14.7% YoY respectively. From January to July, auto production and sales were 18.235 million and 18.269 million units, up 12.7% and 12% YoY respectively. In July, NEV production and sales were 1.243 million and 1.262 million units, up 26.3% and 27.4% YoY respectively; NEVs accounted for 48.7% of total new car sales. From January to July, NEV production and sales were 8.232 million and 8.22 million units, up 39.2% and 38.5% YoY respectively; NEVs accounted for 45% of total new car sales. (2) According to the China Motorcycle Chamber of Commerce, in July, motorcycle production and sales were 1.871 million and 1.8779 million units, down 0.01% MoM and up 2.25% and 2.51% YoY respectively. From January to July, motorcycle production and sales were 12.4932 million and 12.4993 million units, up 10.35% and 10.14% YoY respectively.

Aluminum Scrap: On Tuesday, the spot price of primary aluminum increased by 40 yuan/mt compared to the previous trading day, with SMM A00 spot closing at 20,590 yuan/mt. The overall aluminum scrap market prices remained stable. Baled UBC scrap aluminum prices ranged from 15,400 to 15,900 yuan/mt (excluding tax), while shredded aluminum tense scrap (priced based on aluminum content) prices ranged from 17,100 to 17,600 yuan/mt (excluding tax). It is expected that the aluminum scrap market will fluctuate at highs this week. Affected by the policy transition period for secondary aluminum, raw material purchase prices are likely to rise, and the supply of shredded aluminum tense scrap (priced based on aluminum content) is expected to tighten, with prices fluctuating between 17,100 and 17,600 yuan/mt (excluding tax). Baled UBC, supported by consumption from downstream can stock enterprises, is expected to range from 15,500 to 16,000 yuan/mt (excluding tax).
 

Silicon Metal: (1) Prices: Yesterday, SMM oxygen-blown #553 silicon in east China was priced at 9,300-9,500 yuan/mt, and #441 silicon at 9,600-9,800 yuan/mt, unchanged from the previous day. The futures market continued to fluctuate considerably, with the main contract 2511 opening at 8,615 yuan/mt, reaching a high of 8,730 yuan/mt, and a low of 8,525 yuan/mt, closing at 8,625 yuan/mt, up 20 yuan/mt from the previous day. Recently, spot prices have been range-bound and stagnant, with market transactions remaining need-based, putting pressure on prices. (2) Production: A small amount of additional production capacity resumed operations, leading to production release. Silicon metal weekly production continued to increase MoM, and supply-side production maintained a slight upward trend in August.

Overseas market: Current overseas ADC12 offers have risen to the range of $2,470-2,500/mt, while domestic import spot prices held steady around 19,700 yuan/mt, with import losses widening again. Local ADC12 offers in Thailand (excluding tax) are concentrated at 82-84 baht/kg.

Inventory: According to SMM statistics, as of August 20, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 31,596 mt, up 164 mt from the previous trading day but down 16 mt WoW from Wednesday, August 13.

Summary: Recent policy adjustments in some regions and tight supply of aluminum scrap have kept raw material costs high, prompting companies to maintain firm offers. SMM ADC12 prices temporarily stabilized at 20,350 yuan/mt. Demand side, the traditional off-season atmosphere persists, with actual consumption showing weak improvement and mediocre transaction performance. In the short term, cost support and policy disruptions may continue to underpin prices, but weak demand coupled with inventory buildup pressure will limit upside room. Going forward, close attention should be paid to the implementation of policies and the recovery pace of demand in the peak season.

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