The most-traded contract fluctuated slightly with a minor decline overnight, while spot premiums for ADC12 widened. [SMM Cast Aluminum Alloy Morning Comment]

10.22 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy 2512 contract opened at 20,460 yuan/mt overnight, hitting a high of 20,515 yuan/mt and a low of 20,435 yuan/mt, before closing at 20,435 yuan/mt, down 25 yuan/mt, or 0.12%, from the previous close. Trading volume was 1,513 lots, and open interest stood at 12,713 lots, with the decrease mainly driven by bulls. In the short term, the futures market is consolidating, while the medium-term moving average system remains bullish, indicating a phase of market watchfulness.

Spot-Futures Price Spread Report: According to SMM data, on October 21, the theoretical premium of the SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy contract (AD2512) at 10:15 expanded to 660 yuan/mt.

Warrant Report: SHFE data showed that on October 21, the total registered volume of cast aluminum alloy warrants was 45,863 mt, an increase of 852 mt from the previous trading day. By region, the total registered volume in Shanghai was 4,244 mt, down 59 mt; Guangdong recorded 12,366 mt, up 334 mt; Jiangsu stood at 8,590 mt, unchanged; Zhejiang reached 15,649 mt, up 577 mt; Chongqing was 5,014 mt, unchanged; and Sichuan remained at 0 mt.

Industry Trends: A recent white paper from the Aluminum Association in the US has reignited attention to the increasingly strategic role of aluminum scrap in the country. Data indicate that the US is both a major producer and consumer of aluminum scrap, yet it continues to export significant volumes overseas. By proposing targeted export bans on used beverage cans (UBCs) and scrap suitable for direct furnace feed, the association aims to retain these valuable resources within the domestic ecosystem. These measures are intended to strengthen the US aluminum industrial base, promote circular production, and reduce reliance on imported primary aluminum. However, they could disrupt global aluminum scrap flows—particularly impacting Asian countries such as India, Malaysia, and China, which rely on US scrap imports for secondary aluminum production. The international market for high-grade aluminum scrap is expected to tighten further, potentially leading to price volatility, intensified competition for cleaner materials, and accelerated efforts by importing countries to upgrade their recycling infrastructure.

Aluminum Scrap: On Tuesday, spot primary aluminum prices edged up slightly from the previous trading day, with the SMM A00 spot price closing at 20,970 yuan/mt, while aluminum scrap market prices remained largely flat. Baled UBC scrap was quoted in the range of 15,900–16,500 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was quoted at 17,300–17,800 yuan/mt (tax excluded). Prices for baled UBC, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap were flat MoM. The aluminum scrap market chose to wait and see the aluminum price trend this week, with offers holding steady across regions. In Hubei, procurement challenges for aluminum tense scrap became prominent, with shredded aluminum tense scrap and mechanical casting aluminum scrap prices rising by 100 yuan/mt consecutively within a single day. The aluminum scrap market is expected to hold up well this week, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) hovering around 17,500-18,000 yuan/mt.

Regarding silicon metal: spot silicon metal prices remained stagnant at low levels. Yesterday, SMM's oxygen-blown #553 silicon in east China was quoted at 9,300-9,400 yuan/mt, flat from the previous day, with some spot and futures-linked sources trading at lows around 9,200 yuan/mt. The futures market remained weak, with the lowest point at 8,400 yuan/mt yesterday, closing at 8,505 yuan/mt, down 60 yuan/mt from the previous day. Downstream buyers' sentiment to drive down prices maintained low-price transactions in the market.

Overseas market: Overseas ADC12 offers held steady at $2,550-2,580/mt, while domestic spot prices remained at 20,300-20,500 yuan/mt. The immediate loss on imports narrowed to around 200 yuan/mt. Local ADC12 offers in Thailand were at 83 baht/kg, excluding tax.

Inventory: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 48,978 mt on October 21, down 78 mt from the previous day and down 148 mt from Tuesday last week (October 14).

Summary: Aluminum prices partially recovered yesterday compared to the previous day, with the SMM ADC12 price rising slightly by 50 yuan/mt to 21,100 yuan/mt. The tight supply of aluminum scrap is unlikely to ease in the short term, with cost support remaining solid. Some enterprises experienced declines in operating rates due to raw material shortages or losses, while finished product inventories at plants remained low, leading to firm or actively following higher offers. Although demand has not shown significant improvement compared to September, overall resilience persists, providing support to prices. However, high social inventory and warrant pressure may limit upside room, while attention should be paid to the impact of policy implementation on the supply side. ADC12 prices are expected to hold up well in the short term, with focus on raw material circulation, demand performance, and inventory changes.

[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 constituting decision-making advice.]