Supported by Costs and Stockpiling, ADC12 Price Fluctuates at Highs in the Short Term [SMM Cast Aluminum Alloy Morning Comment]

9.24 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy ad2512 futures contract opened at the lowest point of 20,275 yuan/mt overnight, reached the highest point of 20,390 yuan/mt, and finally closed at 20,305 yuan/mt, up 25 yuan/mt or 0.12% from the previous close. Trading volume was 2,857 lots, open interest was 11,171 lots, with bears mainly reducing positions.   

Spot-Futures Price Spread Daily Report: According to SMM data, on September 23, the SMM ADC12 spot price had a theoretical premium of 580 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15.

Warrant Daily Report: On September 23, the total registered warrant volume for cast aluminum alloy was 10,936 mt, an increase of 7,058 mt from the previous trading day. By region: Shanghai (2,922 mt, up 1,475 mt), Guangdong (608 mt, up 182 mt), Jiangsu (2,576 mt, up 1,947 mt), Zhejiang (3,208 mt, up 2,163 mt), Chongqing (1,622 mt, up 1,291 mt), and Sichuan (0 mt, unchanged).

Aluminum Scrap: Primary aluminum spot prices dropped slightly on Tuesday compared to the previous trading day, with SMM A00 spot closing at 20,680 yuan/mt, while aluminum scrap market prices remained flat overall. As the traditional peak season begins, orders for some downstream scrap utilization enterprises recovered. However, tight supply remains the main theme in the aluminum scrap market, keeping purchase prices high. Yesterday, baled UBC was mainly quoted at 15,500-16,100 yuan/mt (ex-tax), shredded aluminum tense scrap (priced based on aluminum content) was mainly quoted at 17,200-17,700 yuan/mt (ex-tax). Baled UBC was down 100 yuan/mt WoW, while shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap remained stable WoW. In Anhui, aluminum tense scrap quotes collectively dropped 200 yuan/mt today. With over half of September passed, enterprises in parts of Henan, Jiangxi, and Shandong reported that they have started preparing raw materials for the National Day holiday in advance. Amid the aluminum scrap shortage, overall market prices remain high. Price difference between A00 aluminum and aluminum scrap: The price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan narrowed by 70 yuan/mt WoW to 2,108 yuan/mt, while the price difference between A00 aluminum and mechanical casting aluminum scrap in Shanghai narrowed by 70 yuan/mt WoW to 1,942 yuan/mt.

Silicon Metal: Yesterday, SMM oxygen-blown #553 silicon in east China was at 9,400-9,600 yuan/mt, flat from the previous day. The most-traded contract in the futures market pulled back from the previous day's range. The SI2511 contract opened at 8,930 yuan/mt, hit a low of 8,855 yuan/mt, and closed at 8,925 yuan/mt in the afternoon session, down 25 yuan/mt from the previous day. Silicon suppliers' offers were somewhat chaotic, with some silicon enterprises maintaining firm quotes due to smooth previous purchases, while futures traders' offers were relatively weak in absolute terms due to the futures pullback.

Overseas market: Overseas ADC12 offers were concentrated at $2,530-2,560/mt, while domestic spot prices fell by 100 yuan/mt to 20,000-20,200 yuan/mt, with immediate import losses widening to over 200 yuan/mt. Local ADC12 offers in Thailand, excluding tax, remained at 81-82 baht/kg.

Inventory: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 50,657 mt on September 24, up 733 mt from the previous trading day and 1,758 mt WoW (September 17).

Summary: Aluminum scrap prices remain relatively firm, providing some cost support for ADC12. Demand side, downstream demand has seen mild recovery since September, but peak season performance fell short of expectations. As the National Day holiday approaches, die-casting enterprises are gradually arranging shutdown plans, with pre-holiday stocking demand offering short-term support to spot prices. Overall, rigid costs coupled with stockpiling demand underpin prices, but weak demand recovery and inventory pressure remain constraints. ADC12 prices are expected to hover at highs in the near term, with close attention needed on raw material supply conditions, demand recovery pace, registered warrant changes, and policy implementation.

[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.