Aluminum scrap prices showed slight regional divergence, fluctuating at highs in the short term amid tight supply [SMM Cast Aluminum Alloy Morning Comment]

9.8 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy AD2511 contract opened at 20,315 yuan/mt on Friday night, hitting a high of 20,375 yuan/mt and a low of 20,255 yuan/mt, before closing at 20,265 yuan/mt, down 15 yuan/mt (0.07%) from the previous close. Trading volume stood at 555 lots, while open interest reached 7,731 lots, with bulls dominating the position reduction.   

Basis Report: According to SMM data, the theoretical spot premium of SMM ADC12 over the most-traded cast aluminum alloy contract (AD2511) was 520 yuan/mt based on the 10:15 AM closing price on September 5.

Aluminum scrap: Spot primary aluminum prices edged up WoW on Friday, with SMM A00 closing at 20,610 yuan/mt, while aluminum scrap prices showed divergent adjustments. As the traditional peak season begins, orders at some scrap utilization enterprises recovered, but tight supply remained the dominant theme, keeping procurement costs elevated. Prices for baled UBC, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap held steady MoM. 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, maintaining stable prices WoW. Recent significant price adjustments in some regions stemmed from unconfirmed policy implementation, exacerbating supply shortages and forcing some scrap processors to raise raw material recovery prices to sustain production. Aluminum scrap prices are expected to hover at highs this week amid intensified supply-demand tug-of-war.

Silicon metal: Spot silicon metal prices remained range-bound last week with modest downstream order volumes. SMM oxygen-blown #553 silicon traded at 9,000-9,200 yuan/mt in east China, while #441 silicon traded at 9,300-9,500 yuan/mt. Friday's futures rally, driven by polysilicon market dynamics, prompted some silicon enterprises to adopt a wait-and-see approach this week.

Overseas markets: Current overseas ADC12 offers stood at $2,500-2,520/mt, with import parity maintained around 300 yuan/mt; Thailand's domestic ADC12 ex-VAT quotes temporarily held at 83-84 baht/kg.

Inventory: SMM data showed Foshan, Ningbo, and Wuxi's daily social inventory of secondary aluminum alloy ingots totaled 34,807 mt on September 8, up 413 mt MoM and 1,092 mt WoW from September 1.

Summary: Aluminum prices rebounded slightly on Friday, while secondary aluminum producers held quotes firm, with SMM ADC12 stabilizing at 20,750 yuan/mt. Tight scrap availability and rising procurement costs continue to support firm ADC12 offers. Downstream consumption showed narrow recovery, with limited order growth, suggesting peak season effects need more time to materialize. ADC12 prices are expected to remain supported by costs and hover at highs in the short term, but limited demand recovery coupled with social inventory accumulation restricts upside room for prices. Future 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 constituting decision-making advice.]