Cast aluminum alloy ingots experienced weak destocking for two consecutive weeks, with improved shipments [SMM Morning Comment on Cast Aluminum Alloy]

October 24 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy 2512 contract opened at 20,705 yuan/mt overnight, hit a high of 20,760 yuan/mt and a low of 20,680 yuan/mt, and closed at 20,705 yuan/mt, up 80 yuan/mt or 0.39% from the previous close. Trading volume was 3,107 lots, open interest was 11,280 lots, with bears mainly reducing positions.

Basis Daily: According to SMM data, on October 23, the theoretical premium of the SMM ADC12 spot price against the most-traded cast aluminum alloy contract (AD2512) at the 10:15 AM closing price widened to 640 yuan/mt.

Warrant Daily: SHFE data showed that on October 23, the total registered volume of cast aluminum alloy warrants was 47,803 mt, an increase of 180 mt from the previous trading day. The total registered volume in Shanghai was 4,244 mt, unchanged from the previous trading day; the total registered volume in Guangdong was 14,126 mt, unchanged from the previous trading day; the total registered volume in Jiangsu was 8,590 mt, unchanged from the previous trading day; the total registered volume in Zhejiang was 15,829 mt, an increase of 180 mt from the previous trading day; the total registered volume in Chongqing was 5,014 mt, unchanged from the previous trading day; the total registered volume in Sichuan was 0 mt, unchanged from the previous trading day.

Aluminum Scrap Side: On Thursday, the spot price of primary aluminum rose from the previous trading day, breaking through the 21,000 mark. The SMM A00 spot price closed at 21,040 yuan/mt, while aluminum scrap market prices adjusted divergently. Baled UBC was quoted centrally at 15,900-16,500 yuan/mt (tax excluded), shredded aluminum tense scrap (priced based on aluminum content) was quoted centrally at 17,300-17,800 yuan/mt (tax excluded). Baled UBC was up 100 yuan/mt WoW, while shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap were flat WoW. Regarding the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mechanical casting aluminum scrap in Shanghai widened by 60 yuan/mt WoW to 2,302 yuan/mt, and the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan widened by 60 yuan/mt WoW to 2,299 yuan/mt.

Silicon Metal Side: (1) Price: Spot silicon metal prices continued to hold steady this week, with the price center remaining low. Yesterday, SMM oxygen-blown #553 silicon in east China was at 9,300-9,400 yuan/mt, flat WoW, while #441 silicon was at 9,500-9,700 yuan/mt, down 50 yuan/mt WoW. In the futures market, influenced by market news and the strength of coking coal, prices trended stronger. The SI2511 contract closed higher at 8,705 yuan/mt yesterday, up 100 yuan/mt WoW; market sentiment warrants attention. (2) Social Inventory: According to SMM statistics on October 23, the total social inventory of silicon metal in major regions was 559,000 mt, a decrease of 3,000 mt from the previous week. This included 123,000 mt in general social warehouses, an increase of 3,000 mt from the previous week, and 436,000 mt in social delivery warehouses (including portions not registered as warrants and spot inventory), a decrease of 6,000 mt from the previous week. Recently, some goods in Xinjiang warehouses continued to be transferred to the Tianjin area, resulting in significant regional inventory changes. (Excluding Inner Mongolia, Gansu, etc.)

Overseas market: Overseas ADC12 offers held steady at $2,550–2,580/mt, while domestic spot prices rose by 100 yuan/mt to 20,400–20,600 yuan/mt, with immediate import losses around 200 yuan/mt. Local ADC12 offers in Thailand were at 83 baht/kg, excluding tax.

Inventory: On October 23, the social inventory of secondary aluminum alloy ingots in major domestic consumption areas was 54,700 mt, down 100 mt WoW, marking a weak destocking trend for two consecutive weeks. Recently, traders' warehouse inflows of alloy ingots have been low, while feedback indicated improved shipments of aluminum alloy ingots, especially non-standard products, driving the reduction in social inventory.

Summary: Currently, aluminum scrap supply remains tight, and procurement costs climbed further during the week. To ensure order fulfillment, enterprises generally made high-priced purchases, with low-priced sources scarce, leading to a continuous rise in overall production costs and subsequently pushing up offers. Overall demand remains resilient, coupled with low finished product inventories at manufacturers and ongoing order delivery pressure, providing some support to market prices. In the short term, supported by rigid cost pressures and a tight supply-demand balance, ADC12 aluminum alloy ingot prices are expected to hold up well. Subsequent focus should be on raw material supply, consumption 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 intended as decision-making advice.]