Cast Aluminum Alloy Most-Traded Contract Opened Lower, Fluctuated Slightly Lower, Short-Term Consolidation Pattern Continues [SMM Cast Aluminum Alloy Morning Comment]

December 3 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy 2602 contract opened lower overnight, then quickly dropped to a low of 21,030 yuan/mt, before fluctuating rangebound between 21,080-21,110 yuan/mt. Overall, it showed a pattern of opening lower, fluctuating narrowly, and closing slightly down, with the final closing price at 21,045 yuan/mt, a slight pullback from the opening. The fluctuation range was 0.31%. Open interest decreased by 47 lots, and trading volume was 1,403 lots, indicating a consolidation with reduced volume. The probability of continued sideways movement in the short term remains high.

Basis Daily: According to SMM data, on December 2, the theoretical spot price premium of SMM ADC12 spot cargo over the most-traded cast aluminum alloy contract (AD2601) at the 10:15 AM closing price narrowed to 450 yuan/mt.

Warrant Daily: SHFE data showed that on December 2, the total registered volume of cast aluminum alloy warrants was 64,198 mt, a decrease of 29 mt from the previous trading day. The breakdown by region is as follows: Shanghai (4,757 mt, unchanged), Guangdong (20,396 mt, down 29 mt), Jiangsu (10,969 mt, unchanged), Zhejiang (21,648 mt, unchanged), Chongqing (6,308 mt, unchanged), and Sichuan (120 mt, unchanged).

Aluminum Scrap: On Tuesday, spot primary aluminum prices fluctuated narrowly compared to the previous trading day, with the SMM A00 spot price closing at 21,710 yuan/mt, while the aluminum scrap market held steady overall. 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 priced-based offers but limited actual transactions, with tight market supply remaining the dominant theme and procurement prices staying high. Concentrated offers for baled UBC were in the range of 16,250-16,750 yuan/mt (ex-tax), and for shredded aluminum tense scrap (priced based on aluminum content) in the range of 18,200-18,700 yuan/mt (ex-tax). Baled UBC prices increased by 50 yuan/mt MoM, completing the upward trend, while prices for clean tapping aluminum wire, mixed aluminum extrusion scrap free of paint, mechanical casting aluminum scrap, scrap motorcycle wheel, and mixed aluminum tense scrap remained flat MoM. 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) forecast at 18,000-18,500 yuan/mt (ex-tax).

Silicon Metal: On December 2, SMM prices in East China were as follows: non-oxygen blown #553 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; and #3303 at 10,300-10,600 yuan/mt. Silicon prices held steady in Kunming, Huangpu Port, Tianjin, Xinjiang, Sichuan, Shanghai, and north-west China.

Overseas market: The current ADC12 quotation range stands at $2,600–2,630/mt, with the import immediate loss maintained at 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 Tuesday last week (November 25).

Summary: On Tuesday, aluminum prices adjusted narrowly, with the SMM A00 aluminum spot price falling 20 yuan/mt to 21,710 yuan/mt, while the ADC12 price held steady at 21,500 yuan/mt. Recently, aluminum scrap traders showed increased willingness to sell, improving market liquidity, but overall supply remained relatively tight, providing support on the cost side. Demand side presented a mixed picture: on one hand, year-end rush to deliver orders from end-users will lend resilience to the market; on the other hand, high prices’ dampening effect on downstream procurement, coupled with seasonal demand softening, may limit consumption. Supply side, constrained by raw materials, is unlikely to expand significantly, while low industry inventory provides a floor for prices. Overall, ADC12 prices have limited downside room, but an upward breakthrough would require further cost-side increases or stronger-than-expected demand release. Short-term prices are expected to fluctuate narrowly at high levels, with close attention on the pace of aluminum scrap supply improvement, actual policy implementation, and changes in downstream enterprises’ procurement pace.

[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.]