Cast aluminum alloy social inventory maintains a weak destocking mode, with spot cargo fluctuating at highs in the short term [SMM Cast Aluminum Alloy Morning Comment]

12.19 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy contract 2602 opened at 21,080 yuan/mt overnight, hit a high of 21,135 yuan/mt and a low of 21,030 yuan/mt, and finally closed at 21,130 yuan/mt, up 20 yuan/mt, or 0.09%, from the previous trading day. Bears mainly reduced positions.

Spot-Futures Price Spread Report: According to SMM data, on December 18, the SMM ADC12 spot price theoretically traded at a premium of 580 yuan/mt to the most-traded cast aluminum alloy contract (AD2602) at the 10:15 closing price.

Warrant Report: SHFE data showed that on December 18, the total registered volume of cast aluminum alloy warrants was 70,192 mt, an increase of 767 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 22,571 mt, an increase of 827 mt from the previous trading day; the total registered volume in Jiangsu was 12,050 mt, unchanged from the previous trading day; the total registered volume in Zhejiang was 24,475 mt, a decrease of 60 mt from the previous trading day; the total registered volume in Chongqing was 5,919 mt, unchanged from the previous trading day; the total registered volume in Sichuan was 420 mt, unchanged from the previous trading day.

Aluminum Scrap: Spot primary aluminum prices edged down slightly on Thursday from the previous trading day, with SMM A00 spot closing at 21,730 yuan/mt. The aluminum scrap market was largely stable overall. Baled UBC was quoted in a range of 16,250-16,750 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in a range of 18,000-18,550 yuan/mt (tax excluded). 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 were basically stable or slightly raised by 25-50 yuan/mt WoW. The aluminum scrap market is expected to hover at highs this week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) at 18,200-18,900 yuan/mt (tax excluded). The tug-of-war between sellers and buyers continues overall, requiring close tracking of primary aluminum fluctuations, environmental protection policies, and downstream procurement pace, while being wary of the risk of a pullback from highs.

Silicon Metal: (1) Price: Spot silicon metal prices were basically stable this week. Oxygen-blown #553 silicon in East China was at 9,100-9,300 yuan/mt during the week, and #441 silicon was at 9,300-9,500 yuan/mt. In the futures market, the most-traded SI contract closed at 8,645 yuan/mt yesterday, up 360 yuan/mt WoW. Futures prices fluctuated upward this week, but some silicon enterprises were still not strongly willing to sell at low prices. Downstream users mainly digested low-priced inventory, and market trading volume turned lighter WoW. (2) Social Inventory: SMM statistics showed that the total social inventory of silicon metal in major regions was 553,000 mt on December 18, down 8,000 mt WoW. Among them, social inventory in ordinary warehouses was 138,000 mt, up 2,000 mt WoW, and social inventory in delivery warehouses was 415,000 mt (including warrants not yet registered and part of the spot inventory), down 10,000 mt WoW. Excluding Inner Mongolia, Ningxia, Gansu, etc.).

Overseas market: Current overseas ADC12 offers held steady at $2,620–2,640/mt, with import losses near 200 yuan/mt.

Inventory: According to SMM statistics, on December 18, social inventory of secondary aluminum alloy ingots in mainstream domestic consumption areas was 53,400 mt, down 1,256 mt WoW, continuing a slight destocking trend.

Summary: On Thursday, SMM A00 aluminum prices saw a slight correction of 20 yuan/mt to 21,730 yuan/mt, while ADC12 prices remained stable at 21,650 yuan/mt. Aluminum prices fluctuated rangebound, and secondary aluminum market offers were generally steady. Currently, raw material supply is tight, and aluminum scrap traders show strong willingness to hold prices firm, supporting secondary aluminum costs. However, aluminum price fluctuations intensified downstream wait-and-see sentiment, with demand marginally weakening and market transactions sluggish. ADC12 prices are expected to continue fluctuating at highs in the short term, with limited room for change. Downside support comes from rigid cost underpinning due to tight aluminum scrap supply, while upside pressure stems from marginally weakening demand and downstream wait-and-see sentiment triggered by aluminum price volatility. Subsequent attention should focus on raw material circulation, regional environmental protection policies, and downstream order changes.

[Data source statement: Except for public 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.]