The Most-Traded Cast Aluminum Contract Approaches the 21,000 yuan/mt Mark, Maintaining a Short-Term Rising Trend [SMM Cast Aluminum Alloy Morning Comment]

November 3 SMM Cast Aluminum Alloy Morning Comment

Futures: On Friday night, the most-traded cast aluminum alloy AD2601 futures contract opened at 20,920 yuan/mt, reached a high of 20,985 yuan/mt, a low of 20,875 yuan/mt, and finally closed at 20,965 yuan/mt, up 160 yuan/mt or 0.77% from the previous closing price. The trading volume was 2,870 lots, and the open interest was 14,135 lots, with the increase mainly driven by bulls. The short-term moving averages formed a bullish alignment, with MA5 (20,767), MA10 (20,706.5), and MA20 (20,577.75) crossing upward in sequence, and the price continued to trade above the short-term moving averages. The daily chart formed a bullish candlestick with a small upper shadow. After breaking through the previous high of 20,760 yuan/mt, the price continued to rise, with no significant weakening in bullish momentum, and the short-term uptrend remained intact.

Spot-Futures Price Spread Report: According to SMM data, on October 31, the SMM ADC12 spot price theoretically traded at a premium of 515 yuan/mt to the closing price of the most-traded cast aluminum alloy contract (AD2601) at 10:15.

Warrant Report: SHFE data showed that on October 31, the total registered volume of cast aluminum alloy warrants was 50,844 mt, down 30 mt from the previous trading day. The total registered volume in Shanghai was 4,214 mt, down 30 mt; Guangdong 16,371 mt, unchanged; Jiangsu 8,444 mt, unchanged; Zhejiang 16,801 mt, unchanged; Chongqing 5,014 mt, unchanged; Sichuan 0 mt, unchanged.

Aluminum Scrap: On Friday, the spot price of primary aluminum increased from the previous trading day, with SMM A00 spot aluminum closing at 21,280 yuan/mt, while aluminum scrap market prices generally held steady. Baled UBC scrap was quoted in the range of 16,050-16,550 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in the range of 17,700-18,200 yuan/mt (ex-tax). Baled UBC prices held steady WoW, while shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap increased by 100 yuan/mt WoW. Due to improved demand from downstream alloy producers, aluminum tense scrap prices rose accordingly. Quotations for aluminum tense scrap series were collectively raised in Jiangxi, Hubei, Foshan, Anhui, Hunan, and other regions, with increases ranging from 100-200 yuan. The aluminum scrap market is expected to hold up well this week, and the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) may move up to 17,800-18,300 yuan/mt. If the primary aluminum price stabilizes above the 21,200 yuan/mt level, it will further transmit positive effects. Coupled with restocking demand from secondary aluminum enterprises amid low inventory, the tight supply situation is unlikely to change in the short term.

Silicon Metal: (1) Price: On Friday, silicon metal prices were mostly stable. SMM oxygen-blown #553 silicon in east China was at 9,400-9,500 yuan/mt, and #441 silicon at 9,600-9,700 yuan/mt. In the futures market, the most-traded silicon metal SI2601 contract closed at 9,100 yuan/mt at the end of Friday, down 55 yuan/mt from the previous day. Spot silicon metal mainstream transaction prices held steady. (2) Production: With the dry season arriving, silicon enterprises in Sichuan and Yunnan have recently implemented batch production cuts, leading to a decline in operating rates and a reduction in national silicon metal production. (3) Social Inventory: According to SMM statistics, the total social inventory of silicon metal in major regions on October 23 was 559,000 mt, a decrease of 3,000 mt WoW. This consisted of 123,000 mt in general social warehouses (an increase of 3,000 mt WoW) and 436,000 mt in delivery social warehouses (including portions not registered as warrants and spot cargo inventories), a decrease of 6,000 mt WoW. Recently, some cargo from warehouses in Xinjiang continued to be transferred to Tianjin, resulting in significant regional inventory changes. (Excluding Inner Mongolia, Gansu, etc.)

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

Inventory: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi on November 3 totaled 50,291 mt, an increase of 165 mt from the previous trading day and an increase of 1,916 mt from the previous Monday (October 27).

Summary: Last Friday, the SMM A00 aluminum price rose by 80 yuan/mt from the previous day to 21,280 yuan/mt, maintaining a rebound trend, while the SMM ADC12 price held steady at 21,300 yuan/mt. The current tight supply pattern for aluminum scrap remains unchanged, coupled with record-high copper prices pushing up raw material costs, forcing enterprises to procure at high prices to ensure order fulfillment. Affected by factors such as insufficient raw material circulation, high-priced raw materials eroding profits, and unclear policies in Jiangxi, Anhui, and other regions, industry supply has contracted. Overall demand remains resilient, with some secondary aluminum plants recently reporting an increase in orders. However, constrained by low inventories of both finished products and raw materials, enterprises' order-taking strategies have become more cautious, providing some support to market prices. Overall, current cost and supply-side support dominate; ADC12 prices are expected to hold up well in the short term, with attention needed on 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 SMM's internal database model, for reference only and not constituting decision-making advice.]