Futures Prices Retreat, Tug-of-War Between Longs and Shorts Intensifies in Secondary Aluminum Market [SMM Cast Aluminum Alloy Morning Comment]

SMM Cast Aluminum Alloy Morning Comment on 12.16

Futures: The most-traded cast aluminum alloy ad2602 contract opened at the day's high of 21,090 yuan/mt overnight, then fluctuated downward, hitting a low of 20,930 yuan/mt, and finally closed at 20,945 yuan/mt, down 75 yuan/mt or 0.36% WoW. Bears dominated the position increase.

Spot-Futures Price Spread Report: According to SMM data, on Dec. 15, the SMM ADC12 spot price theoretically stood at a premium of 675 yuan/mt to the closing price of the most-traded cast aluminum alloy contract (AD2602) at 10:15.

Warrant Report: SHFE data showed that the total registered warrants for cast aluminum alloy stood at 69,722 mt on Dec. 15, an increase of 575 mt WoW. The total registered volume in Shanghai was 4,757 mt, flat WoW; that in Guangdong was 21,773 mt, up 121 mt WoW; that in Jiangsu was 12,140 mt, up 152 mt WoW; that in Zhejiang was 24,324 mt, up 302 mt WoW; that in Chongqing was 6,308 mt, flat WoW; and that in Sichuan was 420 mt, flat WoW.

Aluminum Scrap: The spot primary aluminum price fell WoW on Monday, with the SMM A00 aluminum closing at 21,710 yuan/mt, and the aluminum scrap market followed the decline. Baled UBC was mainly offered at 16,250-16,750 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was mainly offered at 18,000-18,550 yuan/mt (ex-tax). The price difference between A00 aluminum and shredded aluminum tense scrap closed at 1,864 yuan/mt, and the price difference between A00 aluminum and bare bright aluminum wire in Jiangsu was 881.9 yuan/mt. The aluminum scrap market was expected to hover at highs this week, with the mainstream range of shredded aluminum tense scrap (priced based on aluminum content) at 18,300-19,000 yuan/mt (ex-tax). The tight supply pattern was hard to change, and import and recycling constraints remained, supporting the price. The overall tug-of-war between sellers and buyers continued, and it was necessary to closely track the fluctuations in primary aluminum, environmental protection policies, and downstream procurement pace, and be wary of the risk of a high-level correction.

Silicon Metal: On Dec. 15, SMM non-oxygen blown #553 silicon metal in east China was at 9,100-9,300 yuan/mt; oxygen-blown #553 at 9,100-9,300 yuan/mt; #521 at 9,300-9,500 yuan/mt; #441 at 9,300-9,500 yuan/mt; #421 at 9,500-9,800 yuan/mt; #421 for silicone at 9,800-10,200 yuan/mt; and #3303 at 10,200-10,500 yuan/mt. Silicon prices in Kunming, Huangpu Port, Tianjin, Xinjiang, Shanghai, Sichuan, and north-west China held steady.

Overseas Market: The current overseas ADC12 offer held steady at $2,620-2,640/mt, with the immediate import loss in the range of 200-400 yuan/mt.

Inventory: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 48,862 mt on Dec. 15, down 6 mt WoW and down 356 mt from the previous Monday (Dec. 8).

Summary: Yesterday, SMM A00 aluminum spot prices fell sharply by 340 yuan/mt to 21,710 yuan/mt, while ADC12 prices dropped by 150 yuan/mt to 21,600 yuan/mt. Influenced by the significant pullback in aluminum prices, the secondary aluminum market experienced a broad decline. However, against the backdrop of tight raw material supply, traders' reluctance to sell intensified, limiting the decline in aluminum scrap prices. High costs supported the relative resilience of secondary aluminum prices, with mainstream quotations mainly falling in the range of 100-200 yuan/mt. The sharp short-term fluctuations in aluminum prices heightened downstream wait-and-see sentiment. Die-casting enterprises maintained a cautious procurement pace, resulting in generally moderate market trading. Although year-end phased volume-push demand from end-users provided some support, overall demand showed signs of marginal weakening. The current secondary aluminum alloy market is experiencing a fierce tug-of-war between longs and shorts: tight aluminum scrap supply provides a price floor, while weakening demand and fluctuating aluminum prices suppress procurement sentiment. Declining industry operating rates have driven the market into a supply-demand tight balance. ADC12 prices are expected to continue fluctuating at highs in the short term. Subsequent attention should focus closely on aluminum price trends, aluminum scrap supply, and changes in downstream orders.

[Data Source Statement: Data other than publicly available information are processed by SMM based on public information, market communication, and SMM's internal database models, for reference only and do not constitute decision-making advice.]