Prices Pull Back While Consumption Resilience Persists, Enterprise Restocking Sentiment Sees a Slight Rebound [SMM Cast Aluminum Alloy Morning Comment]

11.18 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy 2601 contract opened at 20,930 yuan/mt overnight, fell to a low of 20,810 yuan/mt, and finally closed at 20,850 yuan/mt, down 140 yuan/mt or 0.67% from the previous close. Trading volume was 2,285, and open interest was 13,554. The price center shifted lower in the short term, trading activity declined, and funds showed a clear wait-and-see sentiment as they exited the market. The KDJ indicator formed a death cross, with the J-line entering the oversold zone (11.73), indicating that short-term adjustment pressure remains but there may be a need for a technical rebound. In the short term, the futures are dominated by technical correction and a wait-and-see sentiment among investors, with prices under pressure below the key 21,000 level; however, structural support from tight aluminum scrap supply on the cost side remains, with key support at 20,800 to be watched.

Spot-Futures Price Spread Report: According to SMM data, on November 17, the SMM ADC12 spot price was at a theoretical premium of 635 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 November 17, the total registered volume of cast aluminum alloy warrants was 59,431 mt, an increase of 697 mt from the previous trading day. The breakdown by region was as follows: Shanghai (4,757 mt, unchanged), Guangdong (18,881 mt, up 577 mt), Jiangsu (11,000 mt, up 153 mt), Zhejiang (19,659 mt, up 480 mt), Chongqing (5,014 mt, unchanged), and Sichuan (120 mt, up 120 mt).

Aluminum Scrap: On Monday, spot primary aluminum prices cooled rapidly compared to the previous trading day, with the SMM A00 spot price closing at 21,630 yuan/mt, and aluminum scrap market prices generally followed the decline. Baled UBC was quoted in the range of 16,400-16,900 yuan/mt (tax excluded), while shredded aluminum tense scrap, priced based on aluminum content, was quoted in the range of 17,800-18,300 yuan/mt (tax excluded). In Jiangxi, Hunan, Hubei, Henan, and other regions, prices were first lowered by 100 yuan/mt on Saturday based on futures movements, followed by another 100 yuan/mt decrease yesterday, resulting in a cumulative decline of 200 yuan/mt, fully reflecting the downward trend. It is expected that the aluminum scrap market will 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. Overall, the market will continue to experience a tug-of-war between sellers and buyers at high levels. It is recommended to closely track primary aluminum price trends, changes in environmental protection policies, and adjustments in downstream enterprises' procurement strategies, while remaining vigilant against the risk of a pullback from highs.

Silicon Metal: On November 17, SMM prices in east China were as follows: non-oxygen blown #553 (9,300-9,400 yuan/mt), oxygen-blown #553 (9,400-9,600 yuan/mt), #521 (9,600-9,700 yuan/mt), #441 (9,600-9,800 yuan/mt), #421 (9,700-9,800 yuan/mt), #421 for silicone use (9,800-10,200 yuan/mt), and #3303 (10,400-10,600 yuan/mt). Individual silicon prices in Tianjin edged down slightly. Silicon prices in Kunming, Huangpu Port, Sichuan, Shanghai, Northwest China, and Xinjiang held steady.

Overseas Market: Current overseas ADC12 quotations held steady in the range of $2,600–2,620/mt, as domestic spot prices fell by 200 yuan/mt to 20,600–20,800 yuan/mt, coupled with a weakening RMB exchange rate, leading to expanded immediate import losses. Local ADC12 ex-tax quotations in Thailand were at 84–85 baht/kg.

Inventory: According to SMM statistics, the social inventory of secondary aluminum alloy ingots in mainstream domestic consumption areas stood at 51,800 mt on November 17, a slight increase of 900 mt compared to Thursday.

Summary: Aluminum prices experienced a significant correction yesterday, with the SMM A00 aluminum spot price falling by 280 yuan/mt to 21,920 yuan/mt; in the secondary aluminum market, ADC12 prices also decreased by 100 yuan/mt to 21,550 yuan/mt. Today, secondary aluminum enterprises adopted a cautious approach to price adjustments, with most choosing to lower their quotations by 100 yuan/mt following the market trend, while a few maintained an optimistic outlook and kept their prices stable for the time being. Approaching year-end, overall market demand is optimistic, downstream consumption shows resilience, and with the correction in aluminum prices, restocking sentiment among some alloy enterprises rebounded slightly. Overall, ADC12 prices are expected to fluctuate rangebound in the short term, with cost support remaining relatively solid. The tight supply situation for aluminum scrap is unlikely to ease soon, and raw material prices are more likely to rise than fall. Demand side exhibits certain resilience, coupled with low industry inventory, just-in-time procurement will provide a floor for prices.

[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.]