Aluminum Scrap Market Fluctuates at Highs, ADC12 Import Losses Narrow [SMM Cast Aluminum Alloy Morning Comment]

8.26 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded AD2511 futures contract for cast aluminum alloy opened at 20,320 yuan/mt, hit a low of 20,260 yuan/mt, reached a high of 20,325 yuan/mt, and closed at 20,305 yuan/mt, down 25 yuan/mt or 0.12% from the previous close. Trading volume was 645 lots, with open interest at 8,126 lots, mainly due to bulls reducing their positions.

Spot-Futures Price Spread Daily Report: According to SMM data, on August 25, the theoretical premium of SMM ADC12 spot price over the closing price of the most-traded AD2511 futures contract at 10:15 AM was 270 yuan/mt.

Aluminum Scrap: On Monday, the spot price of primary aluminum increased by 70 yuan/mt from the previous trading day, with SMM A00 spot closing at 20,780 yuan/mt. The overall market price of aluminum scrap followed suit. Baled UBC prices increased by 50 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. Shredded aluminum tense scrap (priced based on aluminum content) is becoming increasingly tight, 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).

Silicon Metal: On August 25, the spot price of silicon metal increased slightly from the previous Friday. SMM East China oxygen-blown #553 silicon was priced at 9,200-9,500 yuan/mt, up 100 yuan/mt from the previous Friday, and #441 silicon was priced at 9,500-9,700 yuan/mt, up 50 yuan/mt from the previous Friday. In the futures market, the SI2511 contract for silicon metal opened at 8,930 yuan/mt, reached a high of 8,940 yuan/mt, a low of 8,655 yuan/mt, and closed at 8,675 yuan/mt, up 5 yuan/mt from the previous Friday.

Overseas Market: Current overseas ADC12 quotes are in the range of $2,480-2,500/mt. Due to rising domestic prices and a stronger RMB exchange rate, the immediate import loss has narrowed slightly to around 400 yuan/mt. The tax-excluded price of Thai local ADC12 is temporarily at 83-84 baht/kg.

Inventory: According to SMM statistics, on August 26, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 32,373 mt, an increase of 405 mt from the previous trading day and an increase of 914 mt from the previous Tuesday (August 19).

Summary: The supply of aluminum scrap remains tight, providing strong support to the price of secondary aluminum alloys through raw material costs. On Monday, the SMM ADC12 price rose by 100 yuan/mt to 20,550 yuan/mt. Additionally, recent news of canceled tax rebates and additional taxes has led to a strong sentiment among enterprises to raise prices to cope with cost pressures, making it more likely for prices to rise than fall in the short term. Demand side, as the traditional "September peak season" approaches, downstream purchasing sentiment is mildly rebounding, but the recovery momentum is still insufficient. In the short term, ADC12 prices are expected to maintain a fluctuating upward trend, driven by cost support and policy disturbances, but insufficient demand may limit the upside room. If policy impacts deepen or seasonal demand is released as expected, prices may break through the current range; conversely, if policy implementation remains mild and demand continues to be weak, prices may continue to consolidate at high levels. Going forward, close attention should be paid to 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.]