Aluminum Price Sees Slight Correction, ADC12 Fluctuates at Highs in Short Term, Focus on Raw Material Supply and Demand Recovery Progress [SMM Cast Aluminum Alloy Morning Comment]

9.16 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy ad2511 contract opened at 20,585 yuan/mt overnight, with a high of 20,600 yuan/mt, a low of 20,500 yuan/mt, and closed at 20,535 yuan/mt, down 10 yuan/mt or 0.05% from the previous close. Trading volume was 1,068 lots, open interest was 8,528 lots, with bulls mainly reducing positions.   

Basis Report: According to SMM data, on September 15, the SMM ADC12 spot price had a theoretical premium of 510 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2511) at 10:15.

Aluminum scrap side: Spot primary aluminum pulled back from the previous trading day on Monday, with SMM A00 spot closing at 20,950 yuan/mt, while aluminum scrap market prices held steady overall. Yesterday, baled UBC was quoted at 15,750-16,250 yuan/mt (ex-tax), shredded aluminum tense scrap (priced based on aluminum content) was quoted at 17,500-18,000 yuan/mt (ex-tax). Baled UBC, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap were flat WoW. Recently, affected by various factors such as high aluminum price volatility and worsening aluminum scrap supply deficit, wait-and-see sentiment has gradually intensified in some regional yards, with significant lag in price adjustments. Aluminum scrap prices are expected to hover at highs this week, as the game between sellers and buyers intensifies.

Silicon metal side: On September 15, the silicon metal futures main continuous contract showed strong performance influenced by capital flows. The SI2511 contract opened at 8,725 yuan/mt, hit a high of 9,045 yuan/mt, a low of 8,650 yuan/mt, and closed at 8,800 yuan/mt at the end of the session, up 55 yuan/mt from last Friday. After the futures rise, some silicon enterprises tentatively raised offers by around 100-300 yuan/mt, with increased willingness to sell to futures-spot traders among some northern silicon enterprises. Downstream procurement overall remained cautious, with actual transaction prices for some low-grade silicon up about 100 yuan/mt WoW.

Overseas market: Current overseas ADC12 offers rose 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 saw a slight correction to 81-82 THB/kg.

Inventory side: According to SMM statistics, on September 16, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 48,620 mt, up 102 mt from the previous trading day.

Summary: Aluminum prices saw a slight correction on Monday, with SMM ADC12 prices temporarily steady at 21,050 yuan/mt. Affected by tight circulating resources of aluminum scrap domestically and overseas and increased demand from scrap utilization enterprises, the aluminum scrap market shortage intensified, with cost support continuing to underpin ADC12 prices. Demand side, downstream procurement sentiment recovered slightly since September, with demand continuing to rebound, but the actual performance of the traditional peak season remains to be verified. Some enterprises had to purchase at high prices or even across regions to ensure order fulfillment. To avoid losses, manufacturers became more cautious in taking orders and proactively controlled order sizes and operating rates. Overall, ADC12 prices are expected to continue fluctuating at highs in the short term due to cost support, but limited demand recovery and increasing social inventory will continue to cap upside room. Going forward, close attention should be paid to raw material supply conditions, the pace of demand recovery, and potential policy impacts on the market.

[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 as decision-making advice.]