2026 "Program of Large-Scale Equipment Upgrades and Consumer Goods Trade-Ins" Policy Plan Announced, Implementation and Strengthening of "Reverse Invoicing" System [SMM Cast Aluminum Alloy Morning Comment]

12.31 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded cast aluminum alloy futures contract 2603 opened at 21,485 yuan/mt overnight. The price first dipped to around 21,425 yuan/mt, then rebounded and surged to 21,600 yuan/mt, before pulling back to 21,480 yuan/mt towards the close. It closed at 21,480 yuan/mt, up 5 yuan/mt from the previous close, a gain of only +0.02%. Open interest was 16,097 lots (+231), while trading volume was 1,830 lots (-7,855), indicating a decline in trading activity, but a slight increase in open interest, suggesting bulls were adding positions.

Spot-Futures Price Spread Report: According to SMM data, on December 30, the theoretical premium of the SMM ADC12 spot price against the closing price of the most-traded cast aluminum alloy futures contract (AD2602) at 10:15 AM widened to 830 yuan/mt.

Industry Dynamics: The notice jointly issued by the National Development and Reform Commission (NDRC) and the Ministry of Finance regarding the implementation of the program of large-scale equipment upgrades and consumer goods trade-ins in 2026 was publicly released on the 30th. It clarified the support scope, subsidy standards, and work requirements for the "program of large-scale equipment upgrades and consumer goods trade-ins" policy in 2026. Subsidies for vehicle retirement and renewal and vehicle replacement will continue. The recycling network for waste equipment and consumer goods will be improved. The trading of second-hand goods and the remanufacturing of waste equipment will be standardized. The resource recycling industry will be expanded. Ultra-long-term special government bond funds will be allocated to support the construction of high-level resource recycling projects. Major technological equipment for resource recycling will be strengthened through scientific research. The application of recycled materials will be promoted. Supervision of recycling and dismantling enterprises for retired products will be enhanced to improve the standardization level of waste equipment recycling. The implementation of the "reverse invoicing" system for resource recycling enterprises selling to individual retirees of products will be continuously promoted and supervised.

Aluminum Scrap: On Tuesday, the spot price of primary aluminum pulled back compared to the previous trading day, with the SMM A00 spot price closing at 22,180 yuan/mt. The aluminum scrap market followed the downward adjustment of the primary aluminum price. Concentrated offers for baled UBC were in the range of 16,700-17,100 yuan/mt (ex-tax), while concentrated offers for shredded aluminum tense scrap (priced based on aluminum content) were in the range of 18,300-18,800 yuan/mt (ex-tax). Prices in Shanghai, Zhejiang, Jiangsu, Tianjin, and Shandong decreased by 100-300 yuan/mt today, while prices in Guizhou, Henan, Jiangxi, and Hubei decreased by 100 yuan/mt or remained largely stable. The domestic aluminum scrap market price is expected to hover at highs around the New Year holiday, while also needing to be alert to the risk of a pullback from high levels. In terms of price trends, the center for shredded aluminum tense scrap (priced based on aluminum content) will maintain within the range of 18,200-18,700 yuan/mt (ex-tax). In the short term, key 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 30, 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 in Kunming, Huangpu Port, Tianjin, Shanghai, Xinjiang, Sichuan, and north-west China remained stable.

Overseas market: Current overseas ADC12 offers rose slightly to the range of $2,660–2,690/mt, with real-time import profit hovering around 300 yuan/mt.

Summary: On Tuesday, the SMM A00 aluminum price fell sharply by 310 yuan/mt to 22,180 yuan/mt; the SMM ADC12 price dropped by 100 yuan/mt to 22,300 yuan/mt. After hitting a near three-year high, aluminum prices saw a significant pullback, and copper prices also dropped by over 3,000 yuan/mt in a single day, driving aluminum scrap prices down by 100–300 yuan/mt across the board. Secondary aluminum producers' offers diverged: some enterprises lowered quotes by 100 yuan/mt following the market trend, while others chose to hold steady and wait, keeping prices firm. Demand side, affected by high aluminum prices and year-end account closures, overall performance was weak, with insufficient downstream purchase willingness, resulting in a market state of "price without market." Overall, high costs and tightening supply supported prices, but declining demand and aluminum prices fluctuating at highs suppressed 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 intended as decision-making advice.]