Aluminum Scrap Raw Material Declines Limited, Cast Aluminum Prices Still Under Pressure [SMM Cast Aluminum Alloy Morning Comment]

SMM Cast Aluminum Alloy Morning Comment on 11.24

Futures: The most-traded cast aluminum alloy 2601 contract opened at 20,615 yuan/mt overnight, with a high of 20,650 yuan/mt and a low of 20,535 yuan/mt, and finally closed at 20,635 yuan/mt, up 40 yuan/mt or 0.19% WoW. Trading volume was 1,133, and open interest was 11,989. The market showed characteristics of "rangebound fluctuations + slight gains," representing a recovery after the previous correction; the slight decline in open interest indicated that funds have not yet formed a clear trend consensus, and the short-term trend may maintain fluctuations.

Spot-Futures Price Spread Report: According to SMM data, on November 21, the SMM ADC12 spot price showed a theoretical premium of 720 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 21, the total registered warrant volume for cast aluminum alloy was 60,876 mt, down 182 mt from the previous trading day. By region, the total registered volume in Shanghai was 4,757 mt, unchanged WoW; Guangdong's total registered volume was 18,880 mt, down 182 mt WoW; Jiangsu's total registered volume was 11,000 mt, unchanged WoW; Zhejiang's total registered volume was 19,811 mt, unchanged WoW; Chongqing's total registered volume was 6,308 mt, unchanged WoW; Sichuan's total registered volume was 120 mt, unchanged WoW.

Aluminum Scrap Side: Last Friday, spot primary aluminum prices fell from the previous trading day, with SMM A00 spot aluminum closing at 21,380 yuan/mt, and the overall aluminum scrap market followed the decline. Baled UBC was quoted in the range of 16,000-16,500 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in the range of 18,000-18,500 yuan/mt (ex-tax). The aluminum scrap market is expected to hover at highs this 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. Supply side, the tight situation in the aluminum scrap market is difficult to change in the short term, but as primary aluminum prices fluctuate at highs, market fear of high prices may intensify, and the willingness to follow price increases in some regions may weaken.

Silicon Metal Side: (1) Prices: Silicon metal futures prices rose first and then adjusted last week, with the overall center higher WoW. Last Friday, SMM oxygen-blown #553 silicon in east China was at 9,500-9,600 yuan/mt, and the most-traded SI contract closed at 8,960 yuan/mt. Northern silicon enterprises were relatively active in selling to futures and spot traders at highs, while downstream users' purchasing sentiment was generally cautious, mainly purchasing as needed at lows. (2) Social Inventory: SMM statistics showed that on November 20, the total social inventory of silicon metal in major regions was 548,000 mt, up 2,000 mt WoW. This included 129,000 mt in general social warehouses, up 2,000 mt WoW, and 419,000 mt in social delivery warehouses (including unregistered warrants and spot inventory portions), unchanged WoW. Excluding Inner Mongolia, Ningxia, Gansu, etc.).

Overseas market: The current ADC12 quotation range overseas was lowered to $2,600–2,630/mt, with the immediate import loss widening to around 500 yuan/mt, and the import window remained closed.

Inventory side: According to SMM statistics, on November 21, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 50,200 mt, down 333 mt from the previous trading day and down 678 mt from last Friday (November 14).

Summary: Last Friday, affected by macro headwinds, the nonferrous sector was generally under pressure. The SMM A00 aluminum spot price fell sharply by 190 yuan/mt to 21,380 yuan/mt, while the ADC12 price dropped 100 yuan/mt to 21,350 yuan/mt, narrowing the inversion gap with the A00 aluminum price. This week, aluminum scrap prices pulled back overall with the decline in aluminum prices, driving down ADC12 raw material costs. However, tight supply limited the decline, and coupled with some traders holding back sales putting pressure on secondary aluminum plants' procurement, ADC12 prices showed resistance to falling. Overall, ADC12 prices have limited downside room supported by costs and supply, but short-term aluminum price declines and cautious demand are suppressing rebound momentum. In the short term, ADC12 is expected to move sideways within the range of 21,200–21,500 yuan/mt.

[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.]