Bears reduced positions in the most-traded contract overnight, with the high touching 20,435 yuan/mt [SMM Cast Aluminum Alloy Morning Comment]

9.3 SMM Morning Comment on Cast Aluminum Alloy

Futures: The most-traded cast aluminum alloy AD2511 futures contract opened at 20,280 yuan/mt overnight, hitting a high of 20,435 yuan/mt and a low of 20,230 yuan/mt, before closing at 20,405 yuan/mt, up 105 yuan/mt (0.52%) from the previous close. Trading volume stood at 1,210 lots with open interest at 8,051 lots, dominated by short position reductions.

Basis Report: According to SMM data, the theoretical premium of SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy AD2511 futures contract at 10:15 on September 2 was 410 yuan/mt.

Aluminum scrap: Spot primary aluminum prices rebounded WoW on Tuesday, with SMM A00 aluminum closing at 20,710 yuan/mt, while aluminum scrap market prices followed the uptrend. As the traditional peak season begins, orders at some downstream scrap utilization enterprises recovered. However, tight supply remained the dominant theme in the scrap market, keeping procurement prices elevated and generally tracking aluminum price movements. Yesterday, baled UBC was mainly quoted at 15,500-16,000 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was mainly quoted at 17,000-17,500 yuan/mt (ex-tax). Baled UBC rose 50 yuan/mt DoD, while shredded aluminum tense scrap held flat DoD. In Jiangxi, scrap aluminum quotations continued to adjust today with notable divergences—wheel hub prices fell 200 yuan/mt while wrought aluminum alloy scrap prices rose 100 yuan/mt, showing initial signs of policy impacts. Price spreads: The Foshan price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint widened 80 yuan/mt DoD to 2,020 yuan/mt, while the Shanghai price difference between A00 aluminum and mechanical casting aluminum scrap expanded 90 yuan/mt DoD to 1,972 yuan/mt.

Silicon metal: Yesterday, SMM oxygen-blown #553 silicon in east China traded at 9,000-9,200 yuan/mt, up 50 yuan/mt DoD. In futures, the most-traded SI2511 contract opened at 8,480 yuan/mt, peaked at 8,590 yuan/mt, bottomed at 8,440 yuan/mt, and settled at 8,470 yuan/mt, up 95 yuan/mt from the previous session. Industrial silicon futures overall showed stronger performance than Monday, with some traders raising offers slightly. However, downstream buyers procured at earlier low prices and showed limited interest in higher-priced material, resulting in heavy price-bargaining sentiment and thin trading volume.

Overseas markets: Current overseas ADC12 offers stood at $2,490-2,520/mt, with import parity maintained around 300 yuan/mt. Thailand’s local ex-tax ADC12 quotes temporarily held at 83-84 baht/kg.

Inventory: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 33,928 mt on September 3, up 148 mt DoD and 1,314 mt WoW from August 26.

Summary: On Tuesday, the SMM ADC12 price held steady at 20,750 yuan/mt. After September, the regional tax rebate policy remains unclear, and the secondary aluminum market is dominated by a wait-and-see sentiment. Coupled with tight raw material supply, cost support has kept manufacturers' offers firm. On the demand side, the approaching traditional peak season has driven a slight recovery in downstream procurement, but high prices have restrained transaction volumes, and actual demand remains mediocre. In the short term, the ADC12 price is expected to continue fluctuating upward, supported by cost pressures, low inventory, and policy factors. However, slow demand recovery may limit upside room. Going forward, close attention should be paid to the progress of policy implementation, the recovery of aluminum scrap supply, and marginal changes 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 a decision-making suggestion.]