8.25 SMM Cast Aluminum Alloy Morning Comment
Futures: On Friday night, the most-traded AD2511 contract for cast aluminum alloy opened at 20,170 yuan/mt, with a low of 20,170 yuan/mt and a high of 20,320 yuan/mt, closing at 20,285 yuan/mt, up 110 yuan/mt or 0.55% from the previous close. Trading volume was 1,077 lots, and open interest was 8,110 lots, mainly due to an increase in long positions.
Spot-Futures Price Spread Daily Report: According to SMM data, on August 22, the theoretical premium of SMM ADC12 spot price over the most-traded AD2511 contract's closing price at 10:15 AM was 260 yuan/mt.
Aluminum Scrap: On Friday, the spot price of primary aluminum rose by 30 yuan/mt compared to the previous trading day, with SMM A00 spot closing at 20,710 yuan/mt. Baled UBC prices increased by 100 yuan/mt WoW, while shredded aluminum tense scrap (priced based on aluminum content) and wheel hubs (both car and motorcycle) remained unchanged WoW. It is expected that the aluminum scrap market will continue to fluctuate at highs this week. The supply of shredded aluminum tense scrap (priced based on aluminum content) is becoming tighter, with prices expected to fluctuate between 17,100-17,600 yuan/mt (excluding tax). Baled UBC, supported by downstream can stock and other scrap utilization enterprises, is expected to trade within the range of 15,500-16,000 yuan/mt (excluding tax). Recently, many regions have initiated special clean-up work for irregular tax rebates, which has caused widespread shock in the secondary aluminum market. Currently, the market is in a transitional phase of observation, and after the relevant policies are implemented, some downstream secondary aluminum producers may face pressure due to rising tax costs. To offset these costs, companies may lower raw material procurement prices, increasing the pressure on domestic aluminum scrap prices. However, from the supply side, the short-term supply of aluminum scrap will remain tight, giving suppliers a certain degree of pricing power. Overall, SMM believes that aluminum scrap prices will be under pressure, entering a stage of bargaining between sellers and buyers.
Silicon Metal: Last week, silicon metal prices fluctuated considerably. On Friday, SMM oxygen-blown #553 silicon in East China was priced at 9,200-9,300 yuan/mt, and #441 silicon at 9,500-9,600 yuan/mt. In the futures market, influenced by market news, the most-traded SI2511 contract for silicon metal fluctuated considerably around 8,200-8,800 yuan/mt, with downstream users and traders buying the dip.
Overseas Market: Currently, overseas ADC12 prices have slightly risen to the 2,470-2,500 USD/mt range, with import losses narrowing slightly due to higher domestic prices and a stronger RMB exchange rate; local ADC12 prices in Thailand, excluding tax, have slightly increased to 83-84 THB/kg.
Inventory: According to SMM, on August 22, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 31,546 mt, up 16 mt from the previous trading day and down 97 mt from last Friday (August 15).
Summary: Currently, aluminum scrap supply remains tight, and raw material costs provide strong support for secondary aluminum alloy prices. Additionally, recent news of tax rebate cancellations in multiple regions of Anhui and Jiangxi has spurred enterprises to raise prices in response to cost pressures, making prices more likely to rise than fall in the short term. Demand side, consumption has slightly recovered, and downstream enterprises' purchasing sentiment has improved, but the rebound is limited. In the short term, ADC12 prices are expected to maintain a fluctuating upward trend, with cost support and policy disruptions making prices more likely to rise than fall, but weak demand will constrain upside room. If policy impacts deepen or peak season demand is released as expected, prices may break through the current range; conversely, if policy implementation is mild and demand remains weak, prices may continue to consolidate at high levels. Subsequent focus should be on the progress of policy implementation, the recovery of aluminum scrap supply, and marginal improvements in end-use demand.
[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.]
