Futures surged significantly, secondary aluminum consumption still has support [SMM Cast Aluminum Alloy Morning Comment]

12.22 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy 2601 contract opened and closed at 21,300 yuan/mt overnight, hitting a high of 21,395 yuan/mt and a low of 21,265 yuan/mt, ending with a slight increase of 0.31%. Trading volume was 2,250, and open interest was 17,251. Prices were at the upper end of the recent fluctuation range, pulling back slightly after hitting highs but holding the opening price. The VR indicator was 304.72, well above the warning level of 200, reflecting that current volume activity relative to price is relatively high. If volume cannot sustain follow-through, prices are prone to a pullback.

Spot-Futures Price Spread Report: According to SMM data, on December 19, the SMM ADC12 spot price showed a theoretical premium of 585 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2602) at 10:15.

Warrant Report: SHFE data showed that on December 19, the total registered volume of cast aluminum alloy warrants was 70,133 mt, a decrease of 59 mt from the previous trading day. The breakdown by region was: Shanghai (4,757 mt, unchanged), Guangdong (22,571 mt, unchanged), Jiangsu (11,991 mt, down 59 mt), Zhejiang (24,475 mt, unchanged), Chongqing (5,919 mt, unchanged), and Sichuan (420 mt, unchanged).

Aluminum Scrap Side: Last Friday, spot primary aluminum prices fluctuated and increased compared to the previous trading day, with SMM A00 spot closing at 21,820 yuan/mt. The aluminum scrap market followed the increase collectively. Baled UBC was quoted in the range of 16,300-16,800 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in the range of 18,100-18,650 yuan/mt (tax excluded). On December 19, the price difference between A00 aluminum and shredded aluminum tense scrap closed at 1,916 yuan/mt, and the price difference between A00 aluminum and bare bright aluminum wire in Jiangsu was 884.4 yuan/mt. 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 18,000-18,500 yuan/mt (tax excluded). Overall, the tug-of-war between sellers and buyers in the aluminum scrap market is expected to continue next week. Key factors to track include fluctuations in primary aluminum prices, the implementation of environmental protection-driven production restrictions, and changes in the procurement pace of downstream enterprises, while remaining vigilant about the risk of a pullback from highs.

Silicon Metal Side: Last week, spot silicon metal prices were stagnant and moved sideways, with sluggish spot market transactions. Last Friday, SMM oxygen-blown #553 silicon in east China was at 9,100-9,300 yuan/mt, and #421 silicon was at 9,500-9,800 yuan/mt. The most-traded SI contract closed at 8,690 yuan/mt, showing a relatively strong correction in futures. Downstream users focused on digesting inventories, and the order signing atmosphere was not active.

Overseas Market: On the import side, current overseas ADC12 quotations remained stable at $2,620–2,640/mt. Due to active price increases domestically, the immediate import loss narrowed to around 100 yuan/mt.

Inventory side: According to SMM statistics, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 34,473 mt on December 19, a decrease of 146 mt from the previous trading day.

Summary: Last Friday, the SMM A00 aluminum price rose slightly by 90 yuan/mt to 21,820 yuan/mt, while the ADC12 price was raised by 50 yuan/mt to 21,700 yuan/mt. As aluminum prices climbed, the secondary aluminum market actively adjusted prices. Currently, raw material supply is tight, coupled with secondary aluminum enterprises starting their stockpiling cycle, aluminum scrap demand has increased, and traders show a strong willingness to hold prices firm, providing solid support for secondary aluminum costs. However, intensified aluminum price fluctuations have heightened downstream wait-and-see sentiment, with demand marginally weakening and market transactions performing sluggishly. Overall, cost support underpins a solid price floor, but slowing demand and fluctuating aluminum prices jointly suppress purchase willingness. The ADC12 price is expected to continue fluctuating at highs in the short term.

[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.]