Cast Aluminum Alloy Futures Warrant Business Officially Launched on September 22 [SMM Cast Aluminum Alloy Morning Comment]

9.122 SMM Cast Aluminum Alloy Morning Comment

Futures: On Friday night, the most-traded cast aluminum alloy ad2512 futures contract opened at 20,300 yuan/mt, reached a high of 20,340 yuan/mt and a low of 20,300 yuan/mt, and closed at 20,310 yuan/mt, down 45 yuan/mt or 0.22% from the previous close. Trading volume was 818 lots, and open interest was 10,378 lots, with the decrease mainly driven by bulls.   

Spot-Futures Price Spread Report: According to SMM data, on September 19, the theoretical premium of SMM ADC12 spot price to the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 was 595 yuan/mt.

Industry Dynamics: Starting today, September 22, 2025, the standard warrant generation business for cast aluminum alloy futures will be officially launched. The delivery unit for cast aluminum alloy futures is 30 mt per standard warrant, and delivery must be made in integer multiples of each standard warrant.

Aluminum Scrap: On Friday, spot primary aluminum prices rebounded slightly from the previous trading day, with SMM A00 spot aluminum closing at 20,810 yuan/mt, while aluminum scrap market prices remained flat overall. As the traditional peak season begins, orders at some downstream scrap utilization enterprises have recovered. However, tight supply in the aluminum scrap market remains the main theme, keeping purchasing prices high. On Friday, baled UBC was mainly offered at 15,600-16,100 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was mainly offered at 17,300-17,800 yuan/mt (ex-tax). With over half of September passed, enterprises in parts of Henan, Jiangxi, and Anhui reported that they have started stockpiling production raw materials in advance for the National Day holiday. Amid the aluminum scrap shortage, they can only choose to purchase materials at high prices. Aluminum scrap prices are expected to continue fluctuating at highs this week, with both downside risks and cost support present. From a macro perspective, the US Fed's interest rate cut has intensified market volatility. Although domestic tax cleanup policies are in a transition period, they will still push up the tax costs for scrap utilization enterprises in the medium and long term, which will be passed on through bargain down purchasing prices. On the other hand, the tight supply of aluminum scrap is unlikely to ease in the short term, especially with the scarcity of shredded aluminum tense scrap resources giving suppliers strong bargaining power. SMM expects that the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) will hover around 17,300-17,800 yuan/mt, and baled UBC prices will linger at 15,600-16,100 yuan/mt. The market needs to closely monitor the implementation pace of tax policies, the sustainability of downstream stocking demand, and the guidance from primary aluminum prices.

Silicon Metal: (1) Price: On Friday afternoon, silicon metal futures rose rapidly, with the SI2511 contract hitting a high of 9,310 yuan/mt and closing at 9,305 yuan/mt, up 400 yuan/mt from the previous day. Some silicon enterprises showed positive sentiment toward selling to spot traders, and silicon holders raised their offers. Market sentiment changes warrant attention. (2) Production: Operating capacity in the northern region increased in September compared to August, and national silicon metal production continued to rise. (3) Inventory: SMM statistics showed that total social inventory of silicon metal in major regions stood at 543,000 mt as of September 18, up 4,000 mt WoW. This included 120,000 mt in general social warehouses, up 1,000 mt WoW, and 423,000 mt in social delivery warehouses (including unregistered warrants and spot cargo), up 3,000 mt WoW. (Excluding Inner Mongolia, Gansu, etc.)

Overseas market: Overseas ADC12 offers were concentrated at $2,530-2,550/mt. Domestic spot prices fell 200 yuan/mt WoW to 20,100-20,300 yuan/mt, with import losses still hovering around 200 yuan/mt. Local ADC12 offers in Thailand excluding tax remained at 81-82 baht/kg.

Inventory side: According to SMM statistics, total daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi stood at 49,668 mt as of September 22, down 94 mt from the previous trading day but up 1,151 mt from Monday last week (September 15).

Summary: SMM ADC12 prices held steady at 20,950 yuan/mt last Friday. Recent aluminum price corrections boosted traders' willingness to sell aluminum scrap, leading to marginal improvement in market circulation. Raw material procurement pressure for secondary aluminum plants eased slightly, but the overall tight supply pattern remained unchanged. Downstream sectors continued mild recovery past mid-September, with peak season performance generally flat. As the National Day holiday approached, die-casting enterprises successively finalized holiday arrangements, with pre-holiday stocking demand providing phased support to spot prices. Additionally, trade activity improved this week due to a stronger spot-futures price spread. Overall, macro sentiment was under pressure after the US Fed delivered interest rate cuts, while fundamentals saw a tug-of-war between longs and shorts: cost rigidity and pre-holiday stockpiling demand provided support, but sluggish demand recovery and inventory accumulation risks posed constraints. ADC12 prices are expected to hover at highs in the short term, with close attention needed on raw material supply conditions, demand recovery pace, registered warrant changes, and policy implementation.
 

[Data source statement: Except for public 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.]