September Secondary Aluminum PMI Rebounds Above 50 Mark [SMM Cast Aluminum Alloy Morning Comment]

SMM Cast Aluminum Alloy Morning Comment on 9.30

Futures: The most-traded cast aluminum alloy AD2512 futures contract opened at 20,280 yuan/mt overnight, hit a high of 20,370 yuan/mt, and finally closed at the lowest level of 20,325 yuan/mt, up 55 yuan/mt or 0.27% from the previous closing price. Trading volume was 646 lots, and open interest was 11,813 lots, with the increase mainly driven by bulls.

Spot-Futures Price Spread Report: According to SMM data, on September 29, the theoretical spot price of SMM ADC12 was at a premium of 635 yuan/mt to the closing price of the most-traded cast aluminum alloy futures contract (AD2512) at 10:15.

Warrant Report: On September 29, the total registered volume of cast aluminum alloy warrants was 28,781 mt, an increase of 6,221 mt from the previous trading day. By region, the total registered volume in Shanghai was 4,122 mt (up 1,049 mt), Guangdong 3,389 mt (up 997 mt), Jiangsu 7,595 mt (up 510 mt), Zhejiang 9,291 mt (up 3,182 mt), Chongqing 4,384 mt (up 483 mt), and Sichuan 0 mt (unchanged).

Industry Dynamics: According to SMM, the PMI for the secondary aluminum industry in September rebounded by 11.7 percentage points MoM to 61.2%, returning above the 50 mark. This rebound was mainly driven by a mild recovery in downstream consumption, which led to a steady increase in orders and operating rates for secondary aluminum plants, although the overall performance still fell short of traditional peak season levels. Pressure on the raw material side continued to intensify: due to tight circulation resources of aluminum scrap domestically and overseas and growing demand from scrap utilization enterprises, the supply-demand imbalance in the aluminum scrap market worsened. To ensure order delivery, some enterprises had to purchase raw materials at high prices or even across regions, resulting in low levels of both raw material and finished product inventories. Against this backdrop, some secondary aluminum enterprises adopted more cautious order-taking strategies, intentionally controlling order sizes, and operating rates were also constrained accordingly. Approaching the month-end, as most enterprises maintained continuous production or only suspended operations for 1-3 days during the holiday, pre-holiday stockpiling demand pushed raw material inventories to a slight rebound. Looking ahead to October, due to the extended Mid-Autumn and National Day holidays, orders for secondary aluminum plants are expected to face pressure again, and the PMI is projected to show a downward trend.

Aluminum Scrap: On Monday, spot primary aluminum prices fell compared to the previous trading day, with SMM A00 spot aluminum closing at 20,690 yuan/mt, while aluminum scrap market prices overall remained stable. With the National Day holiday approaching, enterprises in some areas of Henan, Jiangxi, and Shandong reported that they had started stockpiling production raw materials in advance for the holiday. Amid the shortage of aluminum scrap, overall market prices remained high. Baled UBC was mainly offered at 15,550-16,150 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). Prices of baled UBC, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap remained flat WoW. Aluminum scrap prices are expected to hover at highs this week. Overall, the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) is projected to fluctuate around 17,300-17,800 yuan/mt, while baled UBC prices are anticipated to hover near 15,600-16,100 yuan/mt. The market should 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 side: On September 29, SMM assessed non-oxygen blown #553 silicon metal in east China at 9,200-9,400 yuan/mt; oxygen-blown #553 at 9,400-9,500 yuan/mt; #521 at 9,500-9,700 yuan/mt; #441 at 9,600-9,700 yuan/mt; #421 at 9,600-9,800 yuan/mt; #421 for silicone use at 9,800-10,300 yuan/mt; and #3303 at 10,500-10,600 yuan/mt. Individual silicon metal prices also declined in Tianjin, Northwest China, Huangpu Port, Xinjiang, and Shanghai. Prices held steady in Kunming and Sichuan.

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

Inventory side: According to SMM statistics, the total daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi reached 50,463 mt on September 30, up 413 mt from the previous trading day and increasing by 539 mt from Tuesday last week (September 23).

Summary: The SMM ADC12 price held steady at 20,900 yuan/mt on Monday. Pre-holiday raw material stocking demand from secondary aluminum plants was constrained by tight aluminum scrap supply, increasing procurement pressure and supporting ADC12 prices. Demand side, as the National Day and Mid-Autumn Festival holidays overlapped this year, downstream die-casting enterprises extended their holiday breaks by 1-2 days YoY. Recent stockpiling was largely completed, but the overall stockpiling volume was limited. Overall, aluminum scrap costs continued to support ADC12 prices, but extended downstream holidays and persistent inventory accumulation capped upside room. ADC12 prices are expected to fluctuate rangebound before the holiday, with close attention needed on raw material supply, holiday inventory changes, and the pace of post-holiday demand recovery.

[Data Source Statement: Except for publicly available information, other data are derived by SMM based on public information, market communication, and SMM's internal database model, for reference only and not constituting decision-making advice.]

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