Aluminum Scrap Supply Tightness Supports Prices Fluctuating at Highs; Pre-Holiday Enterprise Stockpiling Nears End [SMM Cast Aluminum Alloy Morning Comment]

SMM Cast Aluminum Alloy Morning Comment for 9.29

Futures: The most-traded cast aluminum alloy ad2512 contract opened at 20,325 yuan/mt overnight, hit a high of 20,360 yuan/mt, and finally closed at the lowest of 20,240 yuan/mt, down 85 yuan/mt or 0.42% from the previous close. Trading volume was 1,110 lots, open interest was 11,888 lots, with bears increasing positions as the main force.

Basis Report: According to SMM data, on September 26, the theoretical premium of SMM ADC12 spot price to the most-traded cast aluminum alloy contract (AD2512) closing price at 10:15 was 515 yuan/mt.

Warrant Report: On September 26, the total registered volume of cast aluminum alloy warrants was 22,560 mt, an increase of 3,379 mt from the previous trading day. By region, the total registered volume in Shanghai was 3,073 mt (up 0 mt), Guangdong 2,392 mt (up 821 mt), Jiangsu 7,085 mt (up 1,506 mt), Zhejiang 6,109 mt (up 481 mt), Chongqing 3,901 mt (up 571 mt), and Sichuan 0 mt (up 0 mt).

Industry Dynamics: SHFE data showed that on September 26, total aluminum alloy inventory in delivery warehouses was 54,570 mt, an increase of 34,204 mt from the previous Friday. By region, inventory in Shanghai was 4,528 mt, Guangdong 17,173 mt, Jiangsu 10,308 mt, Zhejiang 16,455 mt, Chongqing 6,106 mt, and Sichuan 0 mt.

Aluminum scrap side: Spot primary aluminum prices were flat on Friday compared to the previous trading day, with SMM A00 spot aluminum closing at 20,770 yuan/mt, while aluminum scrap market prices overall held steady. With the National Day holiday approaching, enterprises in parts of Henan, Jiangxi, and Shandong reported having started stockpiling production raw materials in advance for the holiday; amid the aluminum scrap shortage, overall market prices continued to hover at highs. On Friday, baled UBC was quoted in a concentrated range of 15,550-16,150 yuan/mt (ex-tax), shredded aluminum tense scrap (priced based on aluminum content) was quoted in a concentrated range of 17,300-17,800 yuan/mt (ex-tax). Baled UBC, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap were all flat WoW. Aluminum scrap prices are expected to hover at highs next week. On one hand, the tight supply fundamentals of aluminum scrap are difficult to alleviate in the short term, and the supporting effect of downstream pre-holiday stockpiling demand on prices continues to ferment; on the other hand, no further implementation feedback has been received regarding domestic tax cleanup policies, but looking ahead, downstream scrap utilization enterprises still have intentions to drive down prices. Overall, the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) is expected to fluctuate around 17,300-17,800 yuan/mt, while baled UBC prices are likely to hover near 15,600-16,100 yuan/mt. Markets need to closely monitor the sustainability of downstream stocking demand ahead of the National Day holiday, the actual implementation pace of tax policies, and further directional cues from primary aluminum prices.

Silicon metal aspect: (1) Price: Last week, pre-holiday procurement by downstream users led to active market transactions and firm spot prices. By last Friday, SMM oxygen-blown #553 silicon in east China was at 9,400-9,600 yuan/mt, and #441 silicon was at 9,600-9,800 yuan/mt. As centralized procurement gradually concludes, market activity has weakened; monitor manufacturers' sales sentiment and changes in large enterprises' operating rates. (2) Production: In September, operating capacity in northern China continued to increase, leading to higher national silicon metal production. Many silicon enterprises in southwestern China plan to reduce or halt production by late October, so short-term silicon metal supply remains high.

Overseas market: Overseas ADC12 offers were concentrated at $2,530-2,560/mt, while domestic spot prices were at 20,000-20,300 yuan/mt, with immediate import losses widening to around 400 yuan/mt. Local ADC12 ex-tax offers in Thailand remained at 81-82 baht/kg.

Inventory aspect: According to SMM statistics, on September 29, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 50,050 mt, up 104 mt from the previous trading day and up 382 mt WoW (from Monday, September 22).

Summary: Last Friday, the SMM ADC12 price held steady at 20,900 yuan/mt. Pre-holiday raw material stocking demand from secondary aluminum plants was constrained by tight aluminum scrap resources, highlighting procurement pressure. Demand side, as this year's National Day and Mid-Autumn Festival holidays coincide, downstream die-casting enterprises' holiday periods extended by 1-2 days YoY, with enterprise holidays generally lasting 3-8 days (a few maintained production). Although pre-holiday stocking demand boosted transactions for manufacturers and traders, the overall increase was limited. Overall, cost support from aluminum scrap and pre-holiday stocking demand provide a floor for ADC12 prices, but extended downstream holidays, limited restocking increments, and continuous inventory buildup constrain upside potential. ADC12 prices are expected to fluctuate rangebound pre-holiday; closely monitor raw material availability, holiday inventory accumulation, and post-holiday demand recovery.

[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.]