Price difference between A00 aluminum and aluminum scrap narrows, strong expectations remain in aluminum scrap market [SMM Cast Aluminum Alloy Morning Comment]

SMM Cast Aluminum Alloy Morning Comment for 10.14

Futures: The most-traded cast aluminum alloy ad2512 contract opened at 20,475 yuan/mt overnight, hit a high of 20,505 yuan/mt, and finally closed at the lowest of 20,405 yuan/mt, up 80 yuan/mt or 0.39% from the previous close. Trading volume was 1,681 lots, and open interest was 13,116 lots, with the increase mainly driven by bulls. Technically, the contract is in a short-term bullish trend, with prices moving upward along the moving average, supported by both volume-price relationships and indicators. Resistance at 20,800 yuan/mt needs to be watched.

Basis Daily: According to SMM data, on October 13, the spot price of SMM ADC12 showed a theoretical premium of 625 yuan/mt against the closing price of the most-traded cast aluminum alloy contract (AD2512) at 10:15, widening from the previous day.

Warrant Daily: On October 13, the total registered warrant volume for cast aluminum alloy was 41,937 mt, an increase of 2,503 mt from the previous trading day. By region, the total registered volume in Shanghai was 4,303 mt, unchanged; Guangdong, 10,036 mt, up 908 mt; Jiangsu, 8,802 mt, up 91 mt; Zhejiang, 13,782 mt, up 1,204 mt; Chongqing, 5,014 mt, up 300 mt; Sichuan, 0 mt, unchanged.

Aluminum scrap: On Monday, spot primary aluminum prices fell compared to the previous trading day, with SMM A00 spot aluminum closing at 20,800 yuan/mt, and aluminum scrap market prices followed the decline overall. After Trump threatened to impose 100% tariffs on China last Friday, SHFE aluminum broke support and fell during the night session. On October 11, suppliers and scrap utilization enterprises lowered aluminum scrap offers by up to 200 yuan/mt following the futures decline. Prices in some regions, such as Hubei, Anhui, and Hunan, rebounded after the market opened on Monday the 13th. For the price difference between A00 aluminum and aluminum scrap, the spread for mechanical casting aluminum scrap in Shanghai narrowed by 180 yuan/mt WoW to 2,062 yuan/mt, while the spread for mixed aluminum extrusion scrap free of paint in Foshan narrowed by 72 yuan/mt WoW to 2,100 yuan/mt. SMM comprehensively judges that the overall aluminum scrap market prices in October will still hold up well, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) expected to hover around 17,500-18,000 yuan/mt. The market needs to focus on the sustainability of downstream demand after the holiday and further guidance from primary aluminum price trends.

Silicon metal: On October 13, SMM prices in east China were non-oxygen blown #553 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; #3303 at 10,500-10,600 yuan/mt. Prices of silicon in Kunming, Huangpu Port, Sichuan, Shanghai, Tianjin, Northwest China, and Xinjiang also remained stable.

Overseas market: Overseas ADC12 offers held steady at $2,550–2,580/mt, while domestic spot prices fell by 200 yuan/mt to 20,200–20,400 yuan/mt, with the immediate import loss widening to around 400 yuan/mt. Local ADC12 offers in Thailand were at 83 baht/kg on an untaxed basis.

Inventory: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 49,157 mt on October 13, down 703 mt from the previous trading day.

Summary: On Monday, the SMM A00 aluminum price fell by 180 yuan/mt from the previous trading day to 20,800 yuan/mt, while the SMM ADC12 price dropped by 100 yuan/mt to 21,000 yuan/mt. Affected by escalating tariff conflicts, aluminum prices experienced a significant correction, leading to a decline in aluminum scrap prices and a slight easing on the cost side. Most secondary aluminum market participants lowered prices by 100 yuan/mt, though some enterprises chose to hold steady and wait due to optimistic expectations for the future or the impact of low raw material and finished product inventories. Overall, the raw material side continues to face an undersupply situation, and enterprises still face significant cost pressure; meanwhile, demand remains stable with positive trends, providing support for prices. However, continuously rising social inventories are exerting some downward pressure on prices, and ADC12 prices are expected to maintain a fluctuating trend in the short term. Subsequent attention should focus on raw material supply conditions, changes in social inventory, and the pace of post-holiday demand recovery.

[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, and are for reference only, not constituting decision-making advice.]