ADC12 Aluminum Alloy Import Losses Narrowed, High Aluminum Scrap Prices Support the Cost Side [SMM Cast Aluminum Alloy Morning Comment]

8.28 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded AD2511 contract for cast aluminum alloy opened at the highest point of 20,350 yuan/mt last night, then fluctuated downward, hitting bottom at 20,230 yuan/mt, and finally closed at 20,270 yuan/mt, down 90 yuan/mt from the previous close, a decrease of 0.44%. Trading volume was 1,208 lots, with open interest at 8,214 lots, mainly due to longs reducing their positions.

Spot-Futures Price Spread Daily Report: According to SMM data, on August 27, 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 310 yuan/mt.

Aluminum Scrap: On Wednesday, the spot price of primary aluminum rose by 60 yuan/mt compared to the previous trading day, with SMM A00 spot closing at 20,840 yuan/mt, and the overall market price of aluminum scrap followed suit. As the traditional peak season approaches, orders for some downstream scrap utilization enterprises have recovered, but the tight supply in the aluminum scrap market remains the main theme, keeping procurement prices high. Yesterday, baled UBC 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. In Jiangxi and Anhui provinces, the price of aluminum tense scrap was temporarily stable yesterday, while in Hubei province, the price of all types of aluminum scrap increased by 100 yuan/mt today. It is expected that the market price of aluminum scrap will continue to fluctuate at highs this week. Shredded aluminum tense scrap (priced based on aluminum content) is expected to be in short supply, with prices fluctuating between 17,100-17,600 yuan/mt (excluding tax); baled UBC, supported by consumption from downstream can stock and other scrap utilization enterprises, is expected to operate within the range of 15,500-16,000 yuan/mt (excluding tax).

Silicon Metal: On August 27, SMM non-oxygen blown #553 in East China was priced at 9,000-9,200 yuan/mt; oxygen-blown #553 at 9,200-9,400 yuan/mt; #521 at 9,300-9,500 yuan/mt; #441 at 9,500-9,600 yuan/mt; #421 at 9,500-9,600 yuan/mt; #421 for silicone use at 9,800-10,300 yuan/mt; and #3303 at 10,300-10,400 yuan/mt. Silicon prices in Huangpu Port, Tianjin, Northwest, Sichuan, Xinjiang, and Shanghai also decreased. Prices in Kunming remained stable.

Overseas Market: Currently, overseas ADC12 quotes are in the range of $2,480-2,500/mt. Due to the rise in domestic prices and the appreciation of the RMB exchange rate, the immediate import loss has narrowed to around 300 yuan/mt; the duty-free quote for local ADC12 in Thailand 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: Yesterday, aluminum prices rebounded, and the quotations in the secondary aluminum market were generally raised by 100-200 yuan/mt. The continuous tight supply of aluminum scrap has led to a rapid increase in raw material prices, putting significant pressure on the cost side of secondary aluminum alloys. Additionally, the frequent news of tax rebate cancellations and back taxes in multiple regions has led to strong cost pass-through intentions among enterprises, resulting in short-term prices being more likely to rise than fall. Demand side, although approaching the traditional peak season of "September peak season," downstream procurement has only mildly recovered. High prices have suppressed market inquiries, which remain active, but actual transactions are sluggish. In the short term, ADC12 prices are expected to fluctuate upward and hold up well, supported by both cost and policy factors, but weak demand recovery may limit the upside. 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.]