US Fed Cut Interest Rate by 25 Basis Points, Cast Aluminum Alloy Futures Fell Overnight [SMM Cast Aluminum Alloy Morning Comment]

9.18 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy ad2512 contract opened at 20,400 yuan/mt overnight, with a high of 20,420 yuan/mt, a low of 20,270 yuan/mt, and closed at 20,335 yuan/mt, down 125 yuan/mt or 0.61% from the previous close. Trading volume was 2,661 lots, open interest was 9,941 lots, with bulls mainly reducing positions.   

Spot-Futures Price Spread Report: According to SMM data, on September 17, the theoretical premium of SMM ADC12 spot price to the closing price of the most-traded cast aluminum alloy contract (AD2511) at 10:15 was 570 yuan/mt.

Aluminum Scrap: On Wednesday, spot primary aluminum fell 60 yuan/mt from the previous day to 20,890 yuan/mt, and aluminum scrap prices followed the decline overall. Baled UBC was quoted at 15,700-16,200 yuan/mt (tax excluded), shredded aluminum tense scrap (priced based on aluminum content) was quoted at 17,400-17,900 yuan/mt (tax excluded). Baled UBC, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap were down 100 yuan/mt from the previous day. Recently, affected by various factors such as high aluminum price volatility and worsening aluminum scrap supply deficit, wait-and-see sentiment gradually intensified in some regional yards. After holding flat for three consecutive days, Jiangxi, Hunan, and Hubei saw concentrated price cuts today, with obvious lag in price adjustments. Aluminum scrap prices are expected to hover at highs this week, with intensified standoff between sellers and buyers.

Silicon Metal: On September 17, SMM east China non-oxygen blown #553 was at 9,000-9,200 yuan/mt; oxygen-blown #553 at 9,200-9,500 yuan/mt; #521 at 9,400-9,600 yuan/mt; #441 at 9,500-9,700 yuan/mt; #421 at 9,500-9,700 yuan/mt; #421 for silicone use at 9,800-10,100 yuan/mt; #3303 at 10,400-10,500 yuan/mt. Prices partially increased in Kunming, Tianjin, and north-west China. Prices held steady in Huangpu Port, Sichuan, Xinjiang, and Shanghai.

Overseas Market: Current overseas ADC12 offers remained in the range of 2,520-2,550 USD/mt. Affected by the continued strengthening of the RMB exchange rate, immediate import losses narrowed again, approaching the break-even line. Local ADC12 tax-excluded offers in Thailand were slightly lowered to 81-82 THB/kg.

Inventory: According to SMM statistics, on September 17, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 48,899 mt, up 279 mt from the previous day.

Summary: Aluminum prices edged down yesterday, with SMM ADC12 price holding steady at 21,050 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 cost support continuing to underpin ADC12 prices. Demand side, downstream procurement sentiment slightly recovered since September, with demand continuing to rebound, but the actual strength 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, actively controlling order sizes and operating rates. Overall, on the macro front, the US Fed cut interest rates by 25 basis points, boosting market risk-off sentiment and causing overnight futures to fall. Fundamentals side, current ADC12 prices are strongly supported by costs, coupled with downstream stocking demand ahead of the National Day holiday, and are expected to hover at highs in the short term. Going forward, close attention should be paid to raw material supply, the pace of demand recovery, and potential market impacts from policy developments.

[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.]