Cast Aluminum the Most-Traded Contract Price Declined, but Market Transactions Remained Sluggish at High Levels [SMM Cast Aluminum Alloy Morning Comment]

11.17 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy 2601 contract opened at 21,185 yuan/mt overnight, fell to a low of 20,880 yuan/mt, and closed at 21,010 yuan/mt, down 85 yuan/mt or 0.4% from the previous close. Trading volume was 3,580, and open interest was 13,944. The short-term moving averages MA5 (21,146) and MA10 (21,073) remained in a bullish arrangement, but the price had fallen below MA10. The medium-term MA20 (20,894.75) currently serves as a key support level. DIFF (174.18) was greater than DEA (167.10), and the red bar (14.16) remained but showed signs of shrinking, indicating weakening bullish momentum. Overall, the contract experienced a pullback after previous gains. In the short term, focus on the effectiveness of MA20 (20,894.75) as support; a break below could lead to further declines, while stabilization at this level may present a rebound opportunity.

Spot-Futures Price Spread Report: According to SMM data, on November 14, the SMM ADC12 spot price was at a theoretical premium of 430 yuan/mt to the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2601).

Warrant Report: SHFE data showed that on November 14, the total registered warrant volume for cast aluminum alloy was 58,734 mt, an increase of 935 mt from the previous trading day. By region, the total registered volume in Shanghai was 4,757 mt, unchanged from the previous day; Guangdong was 18,304 mt, up 302 mt; Jiangsu was 11,000 mt, up 153 mt; Zhejiang was 19,659 mt, up 480 mt; Chongqing was 5,014 mt, unchanged; Sichuan was 0 mt, unchanged.

Aluminum scrap side: Spot primary aluminum prices fluctuated slightly on Friday compared to the previous trading day, with SMM A00 spot aluminum closing at 21,910 yuan/mt. Aluminum scrap market prices were flat from yesterday. Baled UBC was quoted in a range of 16,600-17,100 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was quoted at 17,800-18,500 yuan/mt (ex-tax). The aluminum scrap market is expected to hover at highs next week, with the mainstream price range for shredded aluminum tense scrap (priced based on aluminum content) likely fluctuating between 17,800-18,600 yuan/mt. If primary aluminum prices stabilize above 22,000 yuan/mt, they will continue to support aluminum scrap prices, but be cautious of the risk of a retreat after rapid rise.

Silicon metal side: (1) Prices: Last week, spot silicon metal prices were largely stable. SMM oxygen-blown #553 silicon in east China was at 9,400-9,600 yuan/mt, and #441 silicon was at 9,600-9,800 yuan/mt. Futures market prices fluctuated significantly; the most-traded SI contract weakened last Friday, closing at 9,020 yuan/mt in the afternoon session, down 125 yuan/mt from the previous day. This week, a joint price-firming meeting for silicone monomer enterprises on the demand side is scheduled; monitor changes in monomer plant operating rates and market sentiment. 2) Production: In November, the main decrease in silicon metal supply variables was seen in Sichuan and Yunnan regions, with a slight increase in the north; overall, it maintained a significant MoM decline, with national total supply expected to drop below 400,000 mt.

Overseas market: The current overseas ADC12 quotation range is $2,600-2,620/mt. As domestic spot prices rose rapidly to 20,800-21,000 yuan/mt, coupled with a stronger yuan exchange rate, import immediate losses narrowed to near the break-even line. Local ADC12 prices in Thailand (excluding tax) are at 84-85 baht/kg.

Inventory: According to SMM statistics, as of November 14, social inventory of secondary aluminum alloy ingots in mainstream domestic consumption areas was 50,900 mt, up slightly by 900 mt from Thursday.

Summary: Last Friday, aluminum prices edged down narrowly, while the SMM ADC12 quotation held steady at 21,650 yuan/mt. Currently, aluminum scrap accounts for over 90% of costs, and industry losses have deepened. Downstream demand overall was stable with an increase, but the rapid surge in aluminum prices to 22,000 yuan/mt dampened purchase willingness. Die-casting enterprises with inventory focused on digesting inventories, slowing their procurement pace; low-inventory enterprises continued just-in-time restocking, supporting bottom demand in the market. Overall, ADC12 prices are expected to hold up well in the short term. Cost support remains relatively solid, and the tight supply of aluminum scrap is unlikely to ease soon, with raw material prices more likely to rise than fall. Demand side shows some resilience, coupled with low industry inventory; just-in-time procurement will provide a floor for prices. However, current aluminum prices are already at yearly highs, and downstream acceptance has declined, which may limit further upside room.

[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.]