Aluminum Prices Strengthen, Alloy Market Actively Follows Suit [SMM Morning Comment on Cast Aluminum Alloy]

SMM Cast Aluminum Alloy Morning Comment on 12.23

Futures: The most-traded cast aluminum alloy 2601 contract opened at 21,300 yuan/mt overnight, hit a high of 21,395 yuan/mt, touched a low of 21,205 yuan/mt, and finally closed at 21,225 yuan/mt, down 10 yuan/mt or 0.05%. Trading volume was 6,905, and open interest was 16,755. The contract retreated after a rapid rise during the day, encountering resistance near previous highs. Shrinking volume and open interest, coupled with the KDJ indicator nearing overbought territory, suggested the futures market showed a pattern of fluctuating at highs with some pressure in the short term. The effectiveness of the support level at 21,205 needs monitoring; a break below could lead to further declines, while holding above it may result in continued consolidation within the high range.

Spot-Futures Price Spread Daily Report: According to SMM data, on December 22, the SMM ADC12 spot price showed a theoretical premium of 560 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2602) at 10:15.

Industry Dynamics: Customs data showed that unwrought aluminum alloy imports in November 2025 were 73,200 mt, down 28.2% YoY and down 4.1% MoM. Cumulative imports from January to November 2025 totaled 914,200 mt, down 17.5% YoY. Unwrought aluminum alloy exports in November 2025 were 30,600 mt, up 51.6% YoY but down 1.1% MoM. Cumulative exports from January to November 2025 reached 259,300 mt, up 17.3% YoY.

Warrant Daily Report: SHFE data showed that the total registered warrant volume for cast aluminum alloy was 70,161 mt on December 22, an increase of 28 mt from the previous trading day. By region, the total registered volume in Shanghai was 4,757 mt, unchanged from the previous day; Guangdong's total registered volume was 22,510 mt, down 61 mt from the previous day; Jiangsu's total registered volume was 11,991 mt, unchanged from the previous day; Zhejiang's total registered volume was 24,564 mt, up 89 mt from the previous day; Chongqing's total registered volume was 5,919 mt, unchanged from the previous day; Sichuan's total registered volume was 420 mt, unchanged from the previous day.

Aluminum Scrap: Spot primary aluminum prices continued to rise on Monday compared to the previous trading day, with the SMM A00 spot price closing at 21,930 yuan/mt, and the aluminum scrap market followed the upward trend collectively. Baled UBC scrap was quoted in the range of 16,400-16,900 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in the range of 18,100-18,600 yuan/mt (tax excluded). Prices for baled UBC, clean tapping aluminum wire, and mixed aluminum extrusion scrap free of paint were raised by 100 yuan/mt MoM, while aluminum tense scrap prices in some regions such as Jiangxi, Guizhou, and Hunan remained stable today. The aluminum scrap market is expected to continue hovering 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 persist this 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: On Dec 22, SMM east China non-oxygen blown #553 was at 9,100-9,300 yuan/mt; oxygen-blown #553 at 9,200-9,300 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 use at 9,800-10,200 yuan/mt; #3303 at 10,200-10,500 yuan/mt. Individual silicon prices in Tianjin also increased. Prices in Kunming, Huangpu Port, Xinjiang, Shanghai, Sichuan, and north-west China held steady.

Overseas market: Current overseas ADC12 offers rose slightly to $2,620-2,650/mt, as domestic prices actively increased, narrowing import instant losses to around 100 yuan/mt.

Inventory: According to SMM statistics, on Dec 23, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 47,366 mt, down 165 mt from the previous trading day and down 1,455 mt WoW (Dec 16).

Summary: In the spot market, SMM A00 aluminum ingot prices continued to rise by 110 yuan/mt to 21,930 yuan/mt, while ADC12 prices also raised by 100 yuan/mt to 21,800 yuan/mt. The continuous strength in aluminum prices drove the secondary aluminum market to actively follow with price increases. Currently, raw material supply tends to tighten, coupled with secondary aluminum enterprises entering the stockpiling stage, aluminum scrap demand rose, and traders' sentiment to hold prices firm was evident, supporting secondary aluminum costs. However, demand side marginally weakened, and overall market transactions performed sluggish. In terms of supply, recent activation of heavy pollution weather alerts in multiple regions led some secondary aluminum enterprises to face production restrictions or halts, causing a slight contraction in supply. Overall, cost support and supply tightening jointly solidify the price bottom, but demand slowdown and aluminum prices fluctuating at highs suppress downstream purchase willingness. ADC12 prices are expected to hover 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 relying on SMM's internal database model, for reference only and not constituting decision-making advice.]