Cost Side Surges Significantly, Secondary Aluminum Prices Rise Actively [SMM Cast Aluminum Alloy Morning Comment]

SMM Cast Aluminum Alloy Morning Comment for 12.29

Futures: On Friday night, the most-traded cast aluminum alloy contract 2602 opened at 21,310 yuan/mt, dipped to a low of 21,205 yuan/mt during the session, then fluctuated upward, hitting a high of 21,580 yuan/mt, and finally closed at 21,545 yuan/mt, up 155 yuan/mt or 0.72% from the previous close, with a trading volume of 3,287 and open interest of 6,879, mainly driven by short position reduction.

Spot-Futures Price Spread Report: According to SMM data, on December 26, the SMM ADC12 spot price showed a theoretical premium of 690 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2602) at 10:15.

Warrant Report: SHFE data shows that on December 26, the total registered warrant volume for cast aluminum alloy was 70,431 mt, a decrease of 61 mt from the previous trading day. By region, the total registered volume in Shanghai was 4,757 mt, unchanged; Guangdong was 22,449 mt, down 61 mt; Jiangsu was 11,931 mt, unchanged; Zhejiang was 24,955 mt, unchanged; Chongqing was 5,919 mt, unchanged; Sichuan was 420 mt, unchanged.

Aluminum Scrap Side: On Friday, spot primary aluminum prices dropped slightly compared to the previous trading day, with SMM A00 spot closing at 22,020 yuan/mt, while the aluminum scrap market remained basically stable overall. Some scrap utilization enterprises reported high inventories of wrought aluminum alloy scrap accumulated during the peak season, lacking sufficient orders on hand to hedge raw material inventories, thus temporarily slowing the procurement pace for related scrap. Additionally, repeated environmental protection-driven production restrictions in some regions led to a slight weakening in downstream aluminum scrap demand. Secondary aluminum alloy scrap utilization enterprises indicated that they are expected to begin Chinese New Year stockpiling soon and are currently conducting concentrated procurement of aluminum scrap raw materials, thus accelerating the procurement pace for aluminum tense scrap-based materials. As 2026 approaches, the implementation of resource recycling policies still faces significant obstacles, with issues concerning natural persons and invoice upper limits remaining difficult to resolve. Some recycling enterprises have already chosen to pass on additional tax burdens to the aluminum scrap supply side, posing a risk of downward pressure on the bottom of aluminum scrap prices. In terms of price trends, the operating center for shredded aluminum tense scrap (priced based on aluminum content) is expected to remain in the range of 18,200-18,700 yuan/mt (tax excluded).

Silicon Metal Side: Spot silicon metal prices moved sideways last week. On Friday, SMM oxygen-blown #553 silicon in east China was at 9,200-9,300 yuan/mt, and #421 silicon was at 9,500-9,800 yuan/mt, with prices basically stable during the week. The most-traded SI contract closed at 8,880 yuan/mt, with futures prices fluctuating upward. Downstream users exhibited a strong wait-and-see sentiment, and the order signing atmosphere was not active.

Overseas Market: Current overseas ADC12 offers are maintained in the range of $2,630–2,650/mt. With domestic prices rising rapidly and the Renminbi strengthening, the immediate import profit has widened again, theoretically opening the import window.

Summary: Last Friday, SMM A00 aluminum ingot prices were quoted at 22,020 yuan/mt, up 40 yuan/mt from the previous trading day. ADC12 prices rose by 50 yuan/mt to 22,000 yuan/mt, returning to levels above 22,000 yuan/mt for the first time since May 2022. Currently, raw material supply remains tight, while aluminum and copper prices continue to fluctuate at highs, with copper prices approaching 100,000 yuan/mt, driving rapid price increases for aluminum scrap, especially aluminum tense scrap. Secondary aluminum alloy producers raised their offers multiple times within the day. On the demand side, signs of weakening emerged, as downstream acceptance of high prices was limited, fear of high prices intensified, and overall market transactions were sluggish. Supply side, affected by factors such as environmental protection-related controls, insufficient raw materials, or losses, capacity still faces contraction pressure. Overall, cost support and supply tightening jointly form a price floor, but slowing demand and aluminum prices fluctuating at highs constrain downstream purchase willingness. ADC12 prices are expected to continue fluctuating at highs 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, for reference only and do not constitute decision-making advice.]