12.3 SMM Cast Aluminum Alloy Morning Comment
Futures: The most-traded cast aluminum alloy contract 2603 showed a unilateral fluctuating downward trend overnight. It opened at 21,585 yuan/mt and continued to weaken, accelerating its decline towards the end of the session and closing at the day's low of 21,340 yuan/mt, down 305 yuan/mt or 1.41% from the previous day. The futures indicated that bears dominated, accompanied by bulls reducing positions and exiting, leading to a decrease in both open interest and trading volume, with funds showing an outflow trend. Although both the RSI and WR indicators showed oversold conditions, prices had not yet stopped falling, reflecting bearish market sentiment and maintaining short-term technical weakness.
Basis Daily: According to SMM data, on December 29, the theoretical premium of the SMM ADC12 spot price against the closing price of the most-traded cast aluminum alloy contract (AD2602) at 10:15 expanded to 765 yuan/mt.
Warrant Daily: SHFE data showed that on December 29, the total registered volume of cast aluminum alloy warrants was 71,002 mt, an increase of 571 mt from the previous trading day. The breakdown by region was: Shanghai (4,757 mt, unchanged), Guangdong (22,449 mt, unchanged), Jiangsu (12,351 mt, up 420 mt), Zhejiang (25,106 mt, up 151 mt), Chongqing (5,919 mt, unchanged), and Sichuan (420 mt, unchanged).
Industry Dynamics: On December 29, 2025, the Customs Tariff Commission of the State Council issued an announcement adjusting import tariff rates and headings for certain goods effective January 1, 2026. No adjustments were made to the tariffs for unwrought aluminum alloys (HS code 76012000) and aluminum scrap (HS code 76020000).
Aluminum Scrap: Spot primary aluminum prices rose significantly on Monday compared to the previous trading day, with SMM A00 spot aluminum closing at 22,490 yuan/mt. The aluminum scrap market followed the primary aluminum price increase. Baled UBC was quoted in the range of 16,800-17,200 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was quoted in the range of 18,400-18,900 yuan/mt (ex-tax). Prices in Shanghai, Zhejiang, Jiangsu, Tianjin, and Shandong increased by 200-500 yuan/mt today, while prices in Guizhou, Henan, Jiangxi, and Hubei increased by 100-200 yuan/mt. The price center for shredded aluminum tense scrap (priced based on aluminum content) was expected to remain in the range of 18,200-18,700 yuan/mt (ex-tax). Short-term focus should be on signals regarding the easing of the environmental protection-driven production restriction policy, changes in the procurement pace of downstream enterprises, and the impact of tax burden shifting on the price floor.
Silicon Metal: On December 29, SMM prices in east China were: non-oxygen blown #553 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; and #3303 at 10,200-10,500 yuan/mt. Silicon prices rose in Tianjin and parts of north-west China. Prices remained stable in Kunming, Huangpu Port, Shanghai, Xinjiang, and Sichuan.
Overseas market: Overseas ADC12 offers increased to a range of $2,660–2,680/mt, but the rise was smaller than domestic prices. Domestic spot offers concentrated at 21,500–21,700 yuan/mt, and the real-time profit for imports further widened to 300–500 yuan/mt.
Summary: On Monday, the SMM A00 aluminum price surged by 470 yuan/mt to 22,490 yuan/mt; ADC12 prices also rose by 400 yuan/mt, reaching 22,400 yuan/mt, hitting a new high since May 2022. Currently, raw material supply remains tight, coupled with aluminum prices approaching the high of 23,000 yuan/mt and copper prices breaking through 100,000 yuan/mt, driving rapid price increases for aluminum scrap, especially aluminum tense scrap. High-copper series alloy processing fees also rose accordingly. However, demand side, overall performance was weak, with insufficient downstream purchase willingness, and the market showed a pattern of "price without market." Supply side, affected by environmental protection-related controls, raw material shortages, and losses, capacity still faces contraction pressure. Overall, cost support and supply tightening jointly solidify the price bottom, but demand slowdown and aluminum prices fluctuating at highs suppress downstream purchasing enthusiasm, leaving limited upside room. ADC12 prices are expected to hover 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 not constituting decision-making advice.]
