In December, Aluminum Prices Rose, Driving Up Aluminum Scrap Prices and Intensifying the Supply-Demand Tug-of-War for Cast Aluminum Alloy [SMM Cast Aluminum Alloy Morning Comment]

December 2 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the most-traded cast aluminum alloy 2602 contract opened higher, surged to 21,195 yuan/mt, then pulled back quickly, and subsequently fluctuated rangebound near 21,100 yuan/mt. It rebounded slightly to 21,150 yuan/mt by the close. Open interest stood at 15,332, with a trading volume of 2,381, indicating increased market participation. After a tug-of-war between longs and shorts, bulls held a slight advantage.

Basis Daily Report: According to SMM data, on December 1, the theoretical spot price premium of SMM ADC12 over the closing price of the most-traded cast aluminum alloy contract (AD2601) at 10:15 AM narrowed to 490 yuan/mt.

Warrant Daily Report: SHFE data showed that on December 1, the total registered warrant volume for cast aluminum alloy was 64,227 mt, an increase of 152 mt from the previous trading day. The breakdown by region was as follows: Shanghai (4,757 mt, unchanged), Guangdong (20,425 mt, up 152 mt), Jiangsu (10,969 mt, unchanged), Zhejiang (21,648 mt, unchanged), Chongqing (6,308 mt, unchanged), and Sichuan (120 mt, unchanged).

Aluminum Scrap: On Monday, the spot price of primary aluminum increased significantly compared to the previous trading day, with the SMM A00 spot price closing at 21,730 yuan/mt. The aluminum scrap market followed the upward trend collectively. Entering December, downstream demand for aluminum scrap showed significant divergence. Demand for scrap used in cast aluminum alloys remained robust with a slight increase, providing more support for consumption. Some scrap-consuming enterprises in Shandong reported that raw material procurement was characterized by high prices but thin market activity, with tight supply remaining the main theme and procurement prices staying high. Concentrated offers for baled UBC were in the range of 16,200-16,700 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was offered in the range of 18,200-18,700 yuan/mt (ex-tax). Prices for baled UBC, clean tapping aluminum wire, mixed aluminum extrusion scrap free of paint, mechanical casting aluminum scrap, scrap motorcycle wheel, and mixed aluminum tense scrap increased by 200 yuan/mt MoM. As SHFE aluminum futures prices continued to rise, regions including Jiangxi, Hubei, Foshan, Anhui, and Hunan collectively raised their aluminum scrap offers, with a cumulative price increase of 200 yuan/mt. The aluminum scrap market is expected to continue fluctuating at highs this week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) projected at 18,000-18,500 yuan/mt (ex-tax). The tight supply situation is difficult to change in the short term, as constraints from the recycling end and import side persist, limiting the downside room. Fluctuations in primary aluminum prices remain the core influencing factor. Coupled with intensified year-end environmental protection crackdowns and transportation restrictions, market sentiment is cautious. The overall tug-of-war between sellers and buyers continues. Close attention should be paid to the trends in primary aluminum prices, environmental protection policies, and import supplements, while remaining vigilant against high volatility risks.

Silicon metal: On December 1, SMM east China non-oxygen blown #553 was at 9,300-9,400 yuan/mt; oxygen-blown #553 at 9,500-9,600 yuan/mt; #521 at 9,600-9,700 yuan/mt; #441 at 9,700-9,800 yuan/mt; #421 at 9,700-9,900 yuan/mt; #421 for silicone use at 9,800-10,200 yuan/mt; #3303 at 10,300-10,600 yuan/mt. Prices in Kunming, Huangpu Port, Tianjin, Xinjiang, Sichuan, Shanghai, and north-west China remained stable.

Overseas market: On the import side, the current overseas ADC12 quotation range stands at $2,600-2,630/mt. Due to the rapid price surge in the domestic market, the immediate import loss has narrowed to around 400 yuan/mt.

Inventory: According to SMM statistics, on December 2, the combined daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 49,410 mt, down 309 mt from the previous trading day and down 494 mt from last Tuesday (November 25).

Summary:

[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.]