Policy Wait-and-See Stance Coupled with Tight Raw Material Supply Intensifies Market Competition in Secondary Aluminum [SMM Cast Aluminum Alloy Morning Comment]

9.4 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy AD2511 contract opened at 20,285 yuan/mt overnight, hitting a high of 20,330 yuan/mt and a low of 20,270 yuan/mt, before closing at 20,295 yuan/mt, up 10 yuan/mt (0.05%) from the previous close. Trading volume stood at 437 lots, while open interest reached 8,027 lots, with bulls dominating the position increase.

Spot-Futures Spread Report: According to SMM data, the theoretical premium of SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy contract (AD2511) at 10:15 on September 3 was 445 yuan/mt.

Aluminum Scrap: On Wednesday, baled UBC was quoted at 15,550-16,000 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) traded at 17,200-17,700 yuan/mt (ex-tax). Baled UBC rose 50 yuan/mt from the previous trading day, and shredded aluminum tense scrap (priced based on aluminum content) gained 100-200 yuan/mt. Jiangxi continued to adjust aluminum scrap offers yesterday, with aluminum tense scrap up 200-300 yuan/mt. The policy implementation remains unconfirmed, while recent sharp price adjustments reflect worsening supply shortages, forcing some scrap utilization enterprises to raise raw material procurement prices to maintain production. Aluminum scrap prices are expected to hover at highs this week amid intensified supply-demand tug-of-war. SMM predicts shredded aluminum tense scrap (priced based on aluminum content) will mainly trade at 17,200-17,700 yuan/mt (ex-tax), while baled UBC prices may linger at 15,500-16,000 yuan/mt (ex-tax) supported by rigid demand.

Silicon Metal: On September 3, spot silicon metal prices moved sideways. SMM oxygen-blown #553 silicon in east China was quoted at 9,000-9,200 yuan/mt, flat from the previous day. #441 silicon traded at 9,300-9,500 yuan/mt, also unchanged. In the futures market, the most-traded silicon metal contract fluctuated in the doldrums with limited losses, opening at 8,520 yuan/mt, peaking at 8,620 yuan/mt, bottoming at 8,425 yuan/mt, and settling at 8,490 yuan/mt, down 25 yuan/mt from the prior session.

Overseas Market: Current overseas ADC12 offers stood at $2,490-2,520/mt, with import parity maintained around 300 yuan/mt. Local ex-tax ADC12 quotes in Thailand 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 from the previous trading day and 1,314 mt WoW (from August 26).

Summary: Aluminum prices fluctuated rangebound on Wednesday, while secondary aluminum producers kept offers generally stable, with SMM ADC12 prices unchanged at 20,750 yuan/mt. With regional tax rebate policies still unclear, the secondary aluminum market exhibited strong wait-and-see sentiment. Coupled with persistently tight raw material supply, procurement pressure on enterprises intensified. Demand side, with the traditional peak season approaching, downstream orders have slightly recovered, but high prices continue to restrain transaction volumes, and downstream players mainly make just-in-time procurement. Overall, ADC12 prices may continue to fluctuate upward in the short term, supported by cost, low inventory, and policy pressure, but the slow pace of 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 constituting decision-making advice.]