Aluminum Scrap Supply Shortage Intensifies, ADC12 Aluminum Alloy Prices Fluctuate at Highs [SMM Cast Aluminum Alloy Morning Comment]

9.15 SMM Cast Aluminum Alloy Morning Comment

Futures: On Friday night, the most-traded cast aluminum alloy ad2511 futures contract opened at 20,505 yuan/mt, with a high of 20,650 yuan/mt and a low of 20,475 yuan/mt, and closed at 20,645 yuan/mt, up 170 yuan/mt or 0.83% from the previous close. Trading volume was 2,883 lots, and open interest was 8,598 lots, with the increase mainly driven by bulls.   

Basis Report: According to SMM data, on September 12, the theoretical premium of SMM ADC12 spot price to the most-traded cast aluminum alloy futures contract (AD2511) 10:15 closing price was 450 yuan/mt.

Aluminum scrap side: On Friday, spot primary aluminum prices rose from the previous trading day, with SMM A00 spot closing at 21,020 yuan/mt, and aluminum scrap market prices generally followed the increase. Baled UBC rose 100 yuan/mt WoW, while shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap rose 200 yuan/mt WoW. In Jiangxi, Hunan, Anhui and other regions, aluminum tense scrap prices were raised again on Friday, with an increase of up to 200 yuan/mt. Recently, aluminum scrap prices in some regions have seen large adjustments, as policy implementation has not been further confirmed, market supply shortages have intensified, and some scrap utilization enterprises have had to raise raw material recycling prices to ensure production. Aluminum scrap prices are expected to hover at highs this week, with intensified bargaining between sellers and buyers. Macro perspective, the cleanup of illegal tax refunds across regions continues to deepen. Although policies are still in a transition period and current purchasing quotes do not yet fully reflect the impact, medium and long-term, scrap utilization enterprises will bargain down purchasing prices to pass on rising tax costs, posing downside risks to aluminum scrap prices. On the other hand, the tight supply situation is unlikely to improve in the short term, especially the tight supply of shredded aluminum tense scrap resources will continue to give suppliers bargaining power. SMM expects that the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) will hover around 17,500-18,000 yuan/mt, while baled UBC prices will linger at 15,800-16,300 yuan/mt.

Silicon metal side: Last week, the price center of silicon metal was strong. On Friday, SMM east China oxygen-blown #553 silicon was at 9,100-9,300 yuan/mt, and #441 silicon was at 9,400-9,600 yuan/mt. On Friday, the most-traded futures contract closed at 8,745 yuan/mt, and market trading was light. This week, the downstream polysilicon industry conference may affect silicon metal market sentiment. Pay attention to the conference results and downstream stocking pace before the National Day holiday.

Overseas market: Current overseas ADC12 offers have risen to the range of 2,520-2,550 USD/mt. Affected by the strengthening RMB exchange rate, the immediate import loss has narrowed to within 200 yuan/mt. Local ADC12 ex-tax offers in Thailand were slightly lowered to 81-82 THB/kg.

Inventory side: According to SMM statistics, on September 15, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 48,518 mt, an increase of 261 mt from the previous trading day.

Summary: Last Friday, aluminum prices broke through the 21,000 yuan/mt mark, and the SMM ADC12 price rose again by 100 yuan/mt to 20,950 yuan/mt. Affected by tight domestic and overseas aluminum scrap circulation resources and increased demand from scrap utilization enterprises, the aluminum scrap market shortage intensified, with hoarding pushing prices up rapidly. To ensure order delivery, some manufacturers procured at high prices or across regions, and rising costs further boosted ADC12 prices. Demand side, since September, downstream procurement sentiment has slightly recovered, and demand continues to rebound, but the actual strength of the traditional peak season remains to be verified. To avoid losses, manufacturers have become cautious in taking orders, actively controlling order size and operating levels. Overall, in the short term, ADC12 prices are expected to continue fluctuating at highs with cost support, but limited demand recovery and increasing social inventory will still cap upside room. Follow-up attention should focus on raw material supply conditions, demand recovery progress, and potential market impacts from policies.

[Data source statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database model, for reference only and not constituting decision-making advice.]