Tight Aluminum Scrap Supply Drives Up Costs, Cast Aluminum Alloy Prices Remain Strong but Demand Changes Require Attention [SMM Morning Comment on Cast Aluminum Alloy]

10.27 SMM Cast Aluminum Alloy Morning Comment

Futures: On Friday night, the most-traded cast aluminum alloy 2512 contract opened at 20,690 yuan/mt, hit a high of 20,700 yuan/mt, a low of 20,580 yuan/mt, and closed at 20,670 yuan/mt, down 35 yuan/mt or 0.17% from the previous close. Trading volume was 2,754 lots, and open interest was 8,005 lots, with the decrease mainly driven by bulls. The price is currently above the MA5 (20,595) and MA10 (20,499), and the moving average system still shows a bullish alignment, indicating a positive medium-term trend; however, as the price pulled back near the moving averages, the strength of short-term support needs to be observed.

Spot-Futures Price Spread Report: According to SMM data, on October 24, 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 was 585 yuan/mt.

Warrant Report: SHFE data showed that on October 24, the total registered volume of cast aluminum alloy warrants was 47,899 mt, an increase of 96 mt from the previous trading day. Among them, 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 8,290 mt, a decrease of 300 mt from the previous trading day; the total registered volume in Zhejiang was 16,225 mt, an increase of 396 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 Friday, the spot price of primary aluminum increased from the previous trading day, breaking through the 21,000 mark. The SMM A00 spot price closed at 21,110 yuan/mt. Baled UBC was quoted in the range of 15,950-16,550 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in the range of 17,300-17,800 yuan/mt (tax excluded). 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. If the primary aluminum price stabilizes above the 21,000 yuan/mt mark, it will further transmit positive effects and support aluminum scrap prices, as the tight supply situation is unlikely to change in the short term. Demand side, demand resilience remains in sectors such as NEVs and PV, but the end of the traditional peak season and high social inventory pressure may curb purchasing enthusiasm. Attention should be paid to the post-holiday restocking pace of secondary aluminum enterprises and the sustainability of end-use demand. If the primary aluminum price retreats after a rapid rise or downstream demand falls short of expectations, the aluminum scrap market may face pullback pressure. Overall, the market will continue the tug-of-war between sellers and buyers, and it is necessary to closely track the trend of primary aluminum and policy developments.

Silicon metal side: On October 24, SMM East China non-oxygen blown #553 was at 9,200-9,400 yuan/mt; oxygen-blown #553 was at 9,300-9,400 yuan/mt; #521 was at 9,500-9,600 yuan/mt; #441 was at 9,500-9,700 yuan/mt; #421 was at 9,500-9,800 yuan/mt; #421 for silicone use was at 9,800-10,200 yuan/mt; #3303 was at 10,400-10,600 yuan/mt. Silicon prices in Tianjin saw individual increases. Prices in Kunming, Huangpu Port, Sichuan, Northwest China, Shanghai, and Xinjiang remained stable. Silicon (Si≥97%) prices also held steady today.

Overseas market: Overseas ADC12 aluminum alloy offers remained stable at $2,550–2,580/mt, while domestic spot prices rose by 100 yuan/mt to 20,400–20,600 yuan/mt, with import losses hovering around 200 yuan/mt. Local ADC12 aluminum alloy offers in Thailand (excluding tax) stood at 83 baht/kg.

Inventory side: According to SMM statistics, the combined daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 48,612 mt on October 24, down 21 mt from the previous trading day and 411 mt lower than the previous Friday (October 17).

Summary: Aluminum scrap supply remained tight, driving procurement costs higher. Enterprises generally purchased at high prices to ensure order fulfillment, with low-priced sources scarce, leading to rising overall production costs and pushing up offers. Overall demand remained resilient, coupled with low finished product inventories at manufacturers and persistent 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. Key factors to monitor going forward include raw material supply, consumption performance, and inventory changes.

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