SHFE announced adjustments to the margin and change limits for cast aluminum alloy futures starting from August 28 [SMM Cast Aluminum Alloy Morning Comment]

8.27 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded AD2511 futures contract for cast aluminum alloy opened at the lowest point of 20,270 yuan/mt, reached a high of 20,555 yuan/mt, and finally closed at 20,435 yuan/mt, up 170 yuan/mt or 0.84% from the previous close. Trading volume was 645 lots, with open interest at 8,749 lots, mainly driven by an increase in long positions.  

Spot-Futures Price Spread Daily Report: According to SMM data, on August 26, the theoretical premium of SMM ADC12 spot price over the closing price of the most-traded AD2511 futures contract at 10:15 AM was 255 yuan/mt.

Industry News: On August 26, SHFE issued a notice titled "On Adjusting the Margin Ratio and Price Limit for Casting Aluminum Alloy Futures Contracts," stating that, after research, it has been decided that starting from the close of trading on August 28, 2025 (Thursday), the daily price limit for casting aluminum alloy futures contracts will be adjusted to 5%, the margin ratio for hedging positions will be adjusted to 6%, and the margin ratio for general positions will be adjusted to 7%.

Aluminum Scrap: On Tuesday, the spot price of primary aluminum remained unchanged from the previous trading day, with SMM A00 spot closing at 20,780 yuan/mt. Overall, the aluminum scrap market prices were stable. Shredded aluminum tense scrap (priced based on aluminum content) and auto and motorcycle wheel hubs increased by 100 yuan/mt WoW. In Jiangxi and Hunan, all series of aluminum scrap prices rose by 100 yuan/mt. Regarding the price difference between A00 aluminum and aluminum scrap, in Foshan, the price difference for mixed aluminum extrusion scrap free of paint increased by 80 yuan/mt from last Friday, widening to 1,992 yuan/mt, while in Shanghai, the price difference for mechanical casting aluminum scrap decreased by 11 yuan/mt from last Friday, narrowing slightly to 1,988 yuan/mt. It is expected that this week, aluminum scrap market prices will continue to fluctuate at highs.

Silicon Metal: On August 26, the silicon metal spot market was range-bound. SMM East China oxygen-blown #553 silicon was priced at 9,200-9,500 yuan/mt, and #441 silicon was priced at 9,500-9,700 yuan/mt. The main SI2511 futures contract for silicon metal opened at 8,680 yuan/mt, reached a high of 8,785 yuan/mt, and then declined continuously in the afternoon due to coking coal, hitting a low of 8,505 yuan/mt before closing at 8,515 yuan/mt, down 250 yuan/mt from the previous day. In terms of warrants, according to GFE data, on August 26, the total number of silicon metal warrants was 50,822 lots, a decrease of 116 lots or 580 mt from the previous day.

Overseas Market: Currently, 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 to around 300 yuan/mt; in Thailand, the local ADC12 price excluding tax is temporarily at 83-84 Thai baht/kg.

Inventory: According to SMM statistics, on August 27, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 32,614 mt, an increase of 241 mt from the previous trading day and an increase of 1,018 mt from the previous Wednesday (August 20).

Summary: Aluminum prices held steady yesterday, with most secondary aluminum alloy market offers remaining stable or increasing by 100 yuan/mt. 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 and back taxes in multiple regions has prompted companies to raise prices enthusiastically in response to rising costs, making prices more likely to rise than fall in the short term. Demand side, as the traditional September peak season approaches, downstream procurement sentiment is rebounding mildly, but the recovery remains insufficient. In the short term, ADC12 prices are expected to maintain a fluctuating upward trend, driven by cost support and policy disruptions, though weak demand may limit upside room. If policy impacts deepen or seasonal 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. Going forward, key factors to monitor include 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 as decision-making advice.]