Fear of High Prices Intensifies, Secondary Aluminum Trading Turns Sluggish but Cost Support Keeps Prices Firm [SMM Cast Aluminum Alloy Morning Comment]

November 5 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy 2601 futures contract opened at 20,860 yuan/mt overnight, rose to a high of 20,930 yuan/mt, fell to a low of 20,835 yuan/mt, and finally closed at 20,890 yuan/mt, down 70 yuan/mt or 0.33% from the previous close. The trading volume was 1,719 lots, and the open interest was 14,606 lots, with the decrease mainly driven by bulls reducing positions. In the short term, the cast aluminum alloy 2601 contract faces downward pressure due to bulls reducing positions and weakening technical indicators. It is necessary to monitor the support effectiveness of the MA5 (20,885) and changes in trading volume.

Spot-Futures Price Spread Report: According to SMM data, on November 4, the theoretical premium of the SMM ADC12 spot price against the closing price of the most-traded cast aluminum alloy futures contract (AD2601) at 10:15 narrowed to 450 yuan/mt.

Warrant Report: SHFE data showed that on November 4, the total registered volume of cast aluminum alloy warrants was 54,877 mt, an increase of 3,760 mt from the previous trading day. The breakdown by region was Shanghai (4,484 mt, +270 mt), Guangdong (17,154 mt, +599 mt), Jiangsu (9,046 mt, +602 mt), Zhejiang (19,179 mt, +2,289 mt), Chongqing (5,014 mt, no change), and Sichuan (0 mt, no change).

Industry News: On November 4, the SHFE announced that starting from the trading session on November 10, 2025 (i.e., the night session on November 7), the transaction fees for cast aluminum alloy futures and offset printing paper futures will be adjusted to 0.005% of the transaction value, and intra-day same-day closing transaction fees will be waived. The transaction fees, exercise (fulfillment) fees, and pre-exercise (fulfillment) option self-hedging fees for cast aluminum alloy options and offset printing paper options will be adjusted to 5 yuan/lot. The waiver of intra-day same-day closing transaction fees remains unchanged, and the waivers for post-exercise (fulfillment) futures self-hedging and market maker option self-hedging fees remain unchanged.

Aluminum Scrap: On Monday, the spot price of primary aluminum increased compared to the previous trading day, with the SMM A00 spot price closing at 21,440 yuan/mt. Aluminum scrap market prices followed the rise in aluminum prices. As the traditional peak season ended, downstream demand showed significant divergence. Demand for scrap used in cast aluminum alloys remained stable, providing more consumption support, while demand for scrap used in wrought aluminum alloys began to show signs of weakening. However, tight market supply remained the main theme, keeping purchase prices high, though the sustainability of these high levels needs to be considered. Yesterday, the concentrated offer price for baled UBC was 16,100-16,750 yuan/mt (excluding tax), and the concentrated offer price for shredded aluminum tense scrap priced based on aluminum content was 17,900-18,250 yuan/mt (excluding tax). Prices of baled UBC, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap held steady WoW.

Silicon metal side: Silicon metal futures saw large fluctuations yesterday, with futures prices pulling back rapidly in the afternoon, while silicon enterprise quotations remained stable temporarily. SMM oxygen-blown #553 silicon in east China was at 9,400-9,500 yuan/mt. The most-traded SI2601 futures contract opened at 9,130 yuan/mt, hit an intraday low of 8,860 yuan/mt, a high of 9,175 yuan/mt, and settled at 8,895 yuan/mt. The cost-performance ratio of spot cargo increased, leading to more downstream users and traders placing bids and concluding deals via futures point-price transactions. Trading was relatively active in regions like Xinjiang and Inner Mongolia.

Overseas market: Overseas ADC12 offers were at $2,560–2,590/mt, while domestic spot prices rose 100 yuan/mt to 20,600–20,800 yuan/mt, resulting in an immediate import loss of around 200 yuan/mt. Local ADC12 offers in Thailand (excluding tax) were at 83-84 baht/kg.

Inventory side: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 50,030 mt on November 4, down 261 mt from the previous trading day but up 1,756 mt from the previous Tuesday (October 28).

Summary: Aluminum prices temporarily ended their consecutive rising trend yesterday, with the SMM A00 aluminum spot price holding steady at 21,440 yuan/mt. In the secondary aluminum market, ADC12 prices remained stable at 21,400 yuan/mt. Due to fear of high prices, downstream buyers showed limited willingness to rush to buy amid continuous price rise, leading to thinner market transactions and slight accumulation of finished product inventories at some enterprises. Raw material supply remained tight, keeping procurement costs for secondary aluminum plants high. Coupled with support from the supply side, ADC12 prices are expected to hold up well in the short term.

[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.]