Import Prices for ADC12 Rise, but Short-Term Import Margins Remain in Inverted Territory [SMM Morning Comment on Cast Aluminum Alloy]

SMM Cast Aluminum Alloy Morning Comment 10.28

Futures: The most-traded cast aluminum alloy ad2512 contract opened at the day's high of 20,735 yuan/mt overnight, hit a low of 20,580 yuan/mt, and closed at 20,680 yuan/mt, down 35 yuan/mt or 0.17% from the previous close. Trading volume was 989 lots, and open interest was 6,094 lots, with the decrease mainly driven by bulls. The short-term trend remains bullish (price above short-term moving averages), but overbought signals and long position reductions suggest a potential short-term correction, with support at MA5 (20,648) needing attention.

Spot-Futures Price Spread Report: According to SMM data, on October 27, the SMM ADC12 spot price showed a theoretical premium of 555 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2512) at 10:15.

Aluminum scrap side: On Monday, spot primary aluminum prices continued to rise from the previous trading day, with SMM A00 aluminum closing at 21,160 yuan/mt, while aluminum scrap market prices held flat overall. Baled UBC was mainly offered at 16,000-16,500 yuan/mt (ex-tax), shredded aluminum tense scrap (priced based on aluminum content) was mainly offered at 17,300-17,800 yuan/mt (ex-tax). Baled UBC rose 50 yuan/mt WoW, while shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap held flat WoW. Recently, reports from Henan and Hubei indicated efforts to drive down prices for wrought aluminum alloy scrap from the extrusion sector, with price reductions ranging from 300-800 yuan. SMM attributes this to the approaching end of the peak season, rapid order decline, and insufficient demand. 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 50 yuan/mt WoW to 2,422 yuan/mt; the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan widened by 50 yuan/mt WoW to 2,311 yuan/mt. The aluminum scrap market is expected to hold up well this week.

Silicon metal side: On October 27, SMM non-oxygen blown #553 silicon metal in east China was at 9,200-9,400 yuan/mt; oxygen-blown #553 at 9,300-9,400 yuan/mt; #521 at 9,500-9,600 yuan/mt; #441 at 9,500-9,700 yuan/mt; #421 at 9,500-9,800 yuan/mt; #421 for silicone use at 9,800-10,200 yuan/mt; #3303 at 10,400-10,600 yuan/mt. Individual silicon metal prices in Tianjin increased. Prices in Kunming, Huangpu Port, Sichuan, Northwest China, Shanghai, and Xinjiang held steady.

Overseas market: Overseas ADC12 offers held steady at $2,550-2,580/mt, while domestic spot prices increased by 100 yuan/mt to 20,400-20,600 yuan/mt, resulting in an immediate import loss of around 200 yuan/mt. Local ex-tax ADC12 offers in Thailand were around 83 baht/kg.

Inventory side: According to SMM statistics, on October 28, the total daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi was 48,275 mt, down 100 mt from the previous trading day and down 703 mt from last Tuesday (October 21).

Summary: The tight supply-demand balance for aluminum scrap persists in the current market, with procurement costs rising further. Enterprises are generally purchasing at high prices to ensure order fulfillment, while low-priced sources are scarce. Due to factors such as insufficient raw material circulation, high-priced raw materials eroding profits, and unclear policies in regions like Jiangxi and Anhui, industry supply has contracted. Overall demand remains resilient, coupled with low finished product inventories at manufacturers and ongoing pressure for order delivery, 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. Going forward, close attention should be paid to 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.]