Secondary Aluminum Alloy Social Inventory Maintains Buildup Momentum, Short-Term Focus on Consumption Improvement [SMM Cast Aluminum Alloy Morning Comment]

9.5 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy ad2511 contract opened at 20,220 yuan/mt overnight, hitting a high of 20,305 yuan/mt and a low of 20,205 yuan/mt, before closing at 20,215 yuan/mt, flat from the previous close. Trading volume stood at 514 lots, with open interest at 7,732 lots, mainly driven by long position increases.

Spot-Futures Price 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 4 was 535 yuan/mt.

Aluminum Scrap: On Thursday, spot primary aluminum prices pulled back from the previous trading day, with SMM A00 spot aluminum closing at 20,610 yuan/mt. Aluminum scrap market prices showed significant divergence in adjustments. As the traditional peak season begins, orders at some downstream scrap utilization enterprises recovered. However, tight supply remains the dominant theme in the scrap market, keeping procurement prices elevated. Regionally, Shanghai, Jiangsu, Shandong, and Henan closely followed aluminum price movements with adjustments of 50-100 yuan/mt, while Jiangxi, Hubei, Foshan, and Anhui lagged behind, holding steady WoW. Recent substantial price adjustments in some regions stem from unverified policy implementations exacerbating supply shortages, forcing some scrap processors to raise raw material recovery prices to maintain production. SMM expects aluminum scrap prices to hover at highs this week amid intensified tug-of-war between sellers and buyers. Shredded aluminum tense scrap (priced based on aluminum content) is projected to trade mainly between 17,200-17,700 yuan/mt (ex-tax), while baled UBC prices may fluctuate around 15,500-16,000 yuan/mt (ex-tax) supported by rigid demand.

Silicon Metal: (1) Prices: Spot silicon metal prices showed relatively small WoW changes with a slightly weaker center WoW. Yesterday, oxygen-blown #553 silicon in east China traded at 9,000-9,200 yuan/mt, flat from the previous day, while #441 silicon held steady at 9,300-9,500 yuan/mt. In futures, the most-traded silicon metal contract experienced significant volatility due to market rumors, reaching a daily high of 8,670 yuan/mt and low of 8,385 yuan/mt before closing at 8,515 yuan/mt, up 25 yuan/mt from the previous day. The silicon market saw demand-based transactions. (2) Social Inventory: SMM data showed total silicon metal social inventory across major regions stood at 537,000 mt as of September 4, down 4,000 mt WoW. This includes 117,000 mt in regular social warehouses (down 2,000 mt WoW) and 420,000 mt in delivery warehouses (including unregistered warrants and spot cargo, down 2,000 mt WoW). (Excluding Inner Mongolia, Gansu, etc.)

Overseas Market: Current overseas ADC12 offers range between $2,500-2,520/mt, with import parity maintained around 300 yuan/mt. Local ex-tax ADC12 quotes in Thailand temporarily stand at 83-84 baht/kg.

Inventory: According to SMM statistics, the social inventory of secondary aluminum alloy ingots in mainstream domestic consumption areas stood at 40,197 mt on September 4, an increase of 2,673 mt WoW.

Summary: Aluminum prices extended declines on Thursday, while secondary aluminum producers held quotes largely steady, with the SMM ADC12 price unchanged at 20,750 yuan/mt. Tight availability of aluminum scrap and rising procurement costs for enterprises continued to hold ADC12 market quotes firm. Downstream consumption is in a narrow recovery phase, with limited growth in enterprise orders, and the peak season effect is yet to fully materialize. In the near term, ADC12 prices are expected to hover at highs, supported by costs, but upside room is limited by weak demand recovery and accumulating social inventory. Subsequent trends require close monitoring of raw material supply, the pace of demand recovery, and policy developments.

[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 recommendation.]