Cast Aluminum Alloy Most-Traded Contract Retreats After Rapid Rise, Edges Down 0.05% ADC12 Cost Support Holds Up Well [SMM Cast Aluminum Alloy Morning Comment]

November 7 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy AD2601 futures contract opened at 21,090 yuan/mt overnight, rose to 21,165 yuan/mt in early trading, then pulled back, and finally closed at 20,965 yuan/mt, down slightly by 0.05%, showing a fluctuating trend of "retreat after rapid rise". The trading volume was 2,196, and the open interest was 15,059. The current contract is in a consolidation phase within a short-term bullish trend: technically, it remains strong with support from moving averages, but the intraday retreat after rapid rise and the low RSI indicate possible short-term fluctuations for correction.

Spot-Futures Price Spread Report: According to SMM data, on November 6, the SMM ADC12 spot price had a theoretical premium of 470 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2601) at 10:15.

Aluminum Scrap: On Thursday, the spot price of primary aluminum increased from the previous trading day, with the SMM A00 spot price closing at 21,360 yuan/mt. Aluminum scrap prices followed the rise in aluminum prices. Baled UBC scrap was quoted in the range of 16,000-16,650 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in the range of 17,550-18,050 yuan/mt (tax excluded). Baled UBC prices held steady, while clean tapping aluminum wire, shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap prices increased by 50-100 yuan/mt WoW. As the spot aluminum price pulled back, aluminum scrap prices in Shanghai, Zhejiang, Jiangsu, and other regions followed with a slight correction.

Silicon Metal: (1) Prices: Spot silicon metal prices remained largely stable this week. Yesterday, SMM oxygen-blown #553 silicon in east China was at 9,400-9,500 yuan/mt, flat WoW, and #441 silicon was at 9,600-9,700 yuan/mt, also flat WoW. In the futures market, prices fluctuated significantly, falling first and then rising during the week. The SI2601 contract hit a weekly low of 8,835 yuan/mt and a high of 9,175 yuan/mt, closing at 9,065 yuan/mt in yesterday's late session, down 90 yuan/mt WoW. From suppliers' offers, after a brief decline in futures prices this week, the volume of market orders and transactions increased, but the transaction spot-futures price spread remained weak due to buyer price pressure. Driven by sentiment in coking coal and other factors, futures prices strengthened, with the most-traded contract rising back above 9,000 yuan/mt yesterday. Attention is on potential disruptions to polysilicon enterprise operations from policy changes affecting polysilicon demand, as well as future environmental protection requirements in the north impacting supply. (2) Social Inventory: According to SMM statistics, the total social inventory of silicon metal in major regions was 552,000 mt on November 6, down 6,000 mt WoW. This included 127,000 mt in general social warehouses, up 3,000 mt WoW, and 425,000 mt in delivery social warehouses (including unregistered warrants and spot inventory), down 9,000 mt WoW. Some goods were transferred from futures-spot warehouses to general warehouses or other locations, with limited arrivals during the week, leading to an overall decline in social inventory MoM. (Excluding Inner Mongolia, Gansu, and other regions)

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 the immediate import loss widening to around 300 yuan/mt. Local ADC12 offers in Thailand (excluding tax) were at 83–84 baht/kg.

Inventory: According to SMM statistics, social inventory of secondary aluminum alloy ingots in mainstream domestic consumption areas totaled 55,800 mt on November 6, an increase of 1,000 mt WoW.

Summary: The current tight supply of aluminum scrap persists, coupled with auxiliary materials such as copper continuing to fluctuate at highs, providing cost support that maintains upward momentum for ADC12 prices in the short term. Although demand-side benefits from the resilience of end-use consumption, the rapid surge in aluminum prices at the beginning of the month has triggered fear of high prices among downstream enterprises, leading to a decline in market trading activity. In the short term, ADC12 prices are expected to hold up well, with close attention to the extent of improvement in aluminum scrap supply, the implementation effects of policies, and changes in the procurement pace of downstream enterprises.

[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 do not constitute decision-making advice.]