The prices of auxiliary materials such as copper and silicon continue to rise, and the cost support for ADC12 aluminum alloy remains strong. [SMM Morning Comment on Cast Aluminum Alloy]

10.31 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy 2601 contract opened at 20,690 yuan/mt overnight, hitting a high of 20,745 yuan/mt and a low of 20,620 yuan/mt, and closed at 20,725 yuan/mt, up 20 yuan/mt or 0.10% from the previous close. Trading volume was 1,467 lots, and open interest was 13,121 lots, with the increase mainly driven by bulls. The medium-term trend for the aluminum alloy 2601 contract remains bullish (supported by the alignment of moving averages and an intact upward structure), but in the short term, as the Williams %R indicator approaches overbought levels and the intraday chart shows a retreat after rapid rise, it may face consolidation needs.

Basis Report: According to SMM data, on October 30, the SMM ADC12 spot price showed a theoretical premium of 620 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2601) at 10:15.

Warrant Report: SHFE data showed that on October 30, the total registered warrant volume for cast aluminum alloy was 50,874 mt, an increase of 238 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 16,371 mt, an increase of 238 mt from the previous trading day; the total registered volume in Jiangsu was 8,444 mt, a decrease of 30 mt from the previous trading day; the total registered volume in Zhejiang was 16,801 mt, a decrease of 272 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: On Thursday, the spot price of primary aluminum edged up slightly from the previous trading day, with the SMM A00 spot price closing at 21,200 yuan/mt. The aluminum scrap market overall held steady. Baled UBC was quoted at 16,050-16,550 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was quoted at 17,600-18,100 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 each rose 100 yuan/mt WoW. Due to improved demand from downstream alloy sectors, shredded aluminum tense scrap prices followed the upward trend, with collective price increases for aluminum tense scrap series in Jiangxi, Hubei, Foshan, Anhui, Hunan, and other regions, ranging from 100-200 yuan. If primary aluminum prices retreat after rapid rise, the aluminum scrap market will face pullback pressure, especially for wrought aluminum alloy scrap varieties, which are at greater risk due to environmental protection-driven production restrictions. Overall, the market will continue the tug-of-war between sellers and buyers, and it is recommended to closely track the trend of primary aluminum and policy developments.

Silicon Metal: (1) Price: The center of spot silicon metal quotes edged up slightly this week, with some silicon enterprises showing small price fluctuations, making their prices more competitive compared to those of spot traders. As of October 30, SMM oxygen-blown #553 silicon in east China was at 9,400-9,500 yuan/mt, up 100 yuan/mt WoW, and #441 silicon was at 9,600-9,700 yuan/mt, up 50 yuan/mt WoW. Futures market, the most-traded silicon metal SI2601 futures contract fluctuated upward WoW, closing at 9,155 yuan/mt yesterday, up 235 yuan/mt from last Friday. Market trading sentiment warrants attention. (2) Production: Silicon enterprises in Sichuan and Yunnan recently began production cuts successively, and the operating rate gradually weakened. National silicon metal production declined. (3) Social inventory: According to SMM statistics, the total social inventory of silicon metal in major regions was 558,000 mt as of October 30, down 1,000 mt WoW. This included 124,000 mt in general social warehouses, up 1,000 mt WoW, and 434,000 mt in social delivery warehouses (including portions not registered as warrants and spot inventory), down 2,000 mt WoW. (Excluding Inner Mongolia, Gansu, etc.)

Overseas market: Overseas ADC12 offers were at $2,560–2,590/mt, while domestic spot prices held steady at 20,500–20,700 yuan/mt, with immediate import losses around 200 yuan/mt. Local ADC12 offers in Thailand were at 83.5 baht/kg, tax excluded.

Inventory side: According to SMM statistics, the social inventory of secondary aluminum alloy ingots in mainstream domestic consumption areas was 54,800 mt as of October 30, up 100 mt from last Thursday.

Summary: Affected by tight supply, aluminum scrap (especially aluminum tense scrap) prices continued to climb. Meanwhile, copper prices repeatedly hit record highs, coupled with rising silicon prices, further pushing up raw material costs for secondary aluminum plants. Demand side, secondary aluminum demand was stable with a positive trend this week. Enterprises reported slight order increases in sectors like automotive, but constrained by low finished product and raw material inventories, order-taking strategies became more cautious. Supply side, driven by improved orders, the operating rate of leading secondary aluminum enterprises rose slightly by 0.5 percentage points WoW to 59.1%. However, industry-wide operating rate increases still faced pressure: besides persistent constraints this month such as raw material shortages, losses on production, and policy uncertainties, some alloy plants in Hebei and other regions saw declines in operating rates due to environmental protection-related controls. Overall, bullish and bearish factors are intertwined in the current market, but cost and supply-side support dominate. ADC12 prices are expected to be more likely to rise than fall in the short term. Attention should be paid to raw material prices, inventory changes, and downstream order performance.

[Data source statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and relying on SMM's internal database model, for reference only and do not constitute decision-making advice.]