Weak demand suppresses spot cargo transactions, cast aluminum alloy prices still fluctuate [SMM morning comment]

12.11 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy 2601 contract opened at 21,070 yuan/mt overnight, climbed to a high of 21,175 yuan/mt, fell to a low of 20,730 yuan/mt, and finally closed at 20,915 yuan/mt, down 275 yuan/mt or 1.3% from the previous close. Trading volume was 15,905, open interest was 17,484. The K-value was 61.25, the D-value was 64.93, and the J-value was 53.9, within the neutral range of 50-80. The J-value was lower than the K/D values, indicating short-term pullback pressure. After previously surging to 21,440 and then pulling back, it is currently within the weekly oscillation range. Support can be watched near 20,700, resistance corresponds to the previous high of 21,440.

Spot-Futures Price Spread Daily: According to SMM data, on December 10, the SMM ADC12 spot price had a theoretical premium of 585 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2601) at 10:15.

Warrant Daily: SHFE data showed that on December 10, the total registered volume of cast aluminum alloy warrants was 68,633 mt, an increase of 1,174 mt from the previous trading day. Among them, the total registered volume in Shanghai was 4,757 mt, unchanged from the previous trading day; the total registered volume in Guangdong was 21,529 mt, an increase of 122 mt from the previous trading day; the total registered volume in Jiangsu was 11,988 mt, an increase of 479 mt from the previous trading day; the total registered volume in Zhejiang was 23,631 mt, an increase of 573 mt from the previous trading day; the total registered volume in Chongqing was 6,308 mt, unchanged from the previous trading day; the total registered volume in Sichuan was 420 mt, unchanged from the previous trading day.

Aluminum Scrap: On Wednesday, spot primary aluminum prices fell compared to the previous trading day. SMM A00 spot closed at 21,770 yuan/mt, and the aluminum scrap market followed the decline collectively. Baled UBC was concentratedly quoted at 16,250-16,750 yuan/mt (ex-tax), shredded aluminum tense scrap (priced based on aluminum content) was concentratedly quoted at 18,100-18,650 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 were down 100 yuan/mt MoM. The price difference between A00 aluminum and shredded aluminum tense scrap closed at 1,836 yuan/mt. The price difference between A00 aluminum and bare bright aluminum wire in Jiangsu was 888.1 yuan/mt. Overall, the tug-of-war between sellers and buyers continues. It is necessary to closely track fluctuations in primary aluminum, environmental protection policies, and downstream procurement pace, and be wary of high-level pullback risks.

Silicon Metal: On December 10, SMM non-oxygen blown #553 in east China was at 9,100-9,300 yuan/mt; oxygen-blown #553 was at 9,100-9,300 yuan/mt; #521 was at 9,300-9,500 yuan/mt; #441 was at 9,300-9,500 yuan/mt; #421 was at 9,500-9,800 yuan/mt; #421 for silicone use was at 9,800-10,200 yuan/mt; #3303 was at 10,200-10,500 yuan/mt. Individual silicon prices in Tianjin and north-west China still declined. Silicon prices in Kunming, Huangpu Port, Xinjiang, Shanghai, and Sichuan held steady.

Overseas market: Current ADC12 offers in the Southeast Asian market were slightly lowered to $2,620–2,640/mt. As domestic prices weakened simultaneously, the immediate import loss remained around 400 yuan/mt, and the theoretical import window stayed closed.

Inventory: According to SMM statistics, the weekly social inventory of secondary aluminum alloy ingots in three major consumption areas—Foshan, Ningbo, and Wuxi—totaled 49,047 mt on December 10, down 109 mt from the previous trading day.

Summary: Spot side, today's SMM A00 aluminum spot price dropped 110 yuan/mt to 21,770 yuan/mt, while the ADC12 price fell 100 yuan/mt to 21,500 yuan/mt. As aluminum prices retreated from highs, cost support from aluminum scrap continued to weaken, putting overall pressure on the downside, and the spot market remained in the doldrums. Demand side, current demand showed signs of weakening, and with aluminum futures plunging sharply this week, downstream enterprises' wait-and-see sentiment intensified again, leading to moderate market trading activity. Considering supply-demand and cost-side factors, ADC12 aluminum alloy prices are expected to continue fluctuating weakly in the short term.

[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.]