Aluminum Prices Weaken with Divergent Market Adjustments, Low Inventory Provides Support [SMM Cast Aluminum Alloy Morning Comment]

11.19 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy 2601 contract opened at 20,720 yuan/mt overnight, hit a low of 20,710 yuan/mt, and finally closed at 20,765 yuan/mt, up 35 yuan/mt or 0.17% from the previous closing price. Trading volume was 1,570, and open interest was 13,145. The K-value was 32.26, the D-value was 53.78, and the J-value was -10.77. The J-value entered the oversold zone, indicating a potential short-term rebound, but the K and D values remained in a downward trend, with no clear signal for a trend reversal. Considering the oversold signal from the KDJ, a short-term rebound is possible, but attention should be paid to the breakthrough of the resistance level above. If trading volume fails to support effectively, the rebound may face pressure.

Spot-Futures Price Spread Report: According to SMM data, on November 18, the SMM ADC12 spot price showed a theoretical premium of 690 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2601) at 10:15.

Warrant Report: SHFE data showed that on November 18, the total registered warrant volume for cast aluminum alloy was 59,822 mt, an increase of 391 mt from the previous trading day. The breakdown by region was: Shanghai (4,757 mt, unchanged), Guangdong (18,881 mt, unchanged), Jiangsu (11,000 mt, unchanged), Zhejiang (19,811 mt, up 152 mt), Chongqing (5,232 mt, up 239 mt), and Sichuan (120 mt, unchanged).

Aluminum Scrap: On Tuesday, spot primary aluminum prices continued to decline from the previous trading day, with the SMM A00 spot price closing at 21,460 yuan/mt. Aluminum scrap market prices generally followed the downward trend. Baled UBC was quoted in the range of 16,300-16,800 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in the range of 18,000-18,500 yuan/mt (tax excluded). Prices in Jiangxi, Hunan, Hubei, and Guizhou were lowered by 100 yuan/mt, while Henan saw a 200 yuan/mt decrease today, catching up with the decline. 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. Overall, the market will continue the tug-of-war between sellers and buyers at high levels. It is advisable to closely track primary aluminum price trends, changes in environmental protection policies, and adjustments in downstream enterprises' procurement strategies, while remaining cautious of the risk of a high-level correction.

Silicon Metal: On November 18, SMM prices in east China were non-oxygen blown #553 at 9,300-9,400 yuan/mt; oxygen-blown #553 at 9,400-9,500 yuan/mt; #521 at 9,600-9,700 yuan/mt; #441 at 9,600-9,800 yuan/mt; #421 at 9,700-9,800 yuan/mt; #421 for silicone use at 9,800-10,200 yuan/mt; and #3303 at 10,400-10,600 yuan/mt. Spot silicon prices saw minor declines in Tianjin and parts of north-west China, while prices remained stable in Kunming, Huangpu Port, Sichuan, Shanghai, and Xinjiang.

Overseas market: Overseas ADC12 quotations have risen to a range of $2,600–2,640/mt, as domestic spot aluminum prices fell by 100 yuan/mt to 20,500–20,700 yuan/mt, coupled with a weakening RMB exchange rate, leading to an expansion in immediate import losses. Local ADC12 offers in Thailand are at 84–85 baht/kg, excluding tax.

Inventory: According to SMM statistics, as of November 19, the combined daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 51,497 mt, down 223 mt from the previous trading day but up 1,544 mt from the previous Wednesday (November 12).

Summary: Yesterday, aluminum prices continued to fluctuate downward, with the SMM A00 aluminum spot price falling by 170 yuan/mt to 21,460 yuan/mt. In the secondary aluminum market, ADC12 prices dropped again by 100 yuan/mt to 21,450 yuan/mt. Market pricing showed some divergence: some enterprises lowered their offers following the continued decline in aluminum prices, while others, constrained by difficulties in raw material procurement and cost pressure, kept prices temporarily stable amid strong wait-and-see sentiment. Overall, ADC12 prices are expected to fluctuate rangebound in the short term, supported by relatively solid cost fundamentals. The tight supply of aluminum scrap is unlikely to ease soon, and raw material prices are more likely to rise than fall. Demand side, showing some resilience, coupled with low industry inventory, will provide a floor for prices through just-in-time procurement.

[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, and are for reference only, not constituting decision-making advice.]