SHFE Aluminum Prices Surge Rapidly, Secondary Alloy Follows Suit Positively [SMM Cast Aluminum Alloy Morning Comment]

1.5 SMM Cast Aluminum Alloy Morning Comment

Futures: Affected by the New Year's Day holiday, the SHFE aluminum night session did not open on the last trading day before the holiday.

Spot-Futures Price Spread Daily Report: According to SMM data, on December 31, the SMM ADC12 spot price theoretically represented a premium of 845 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2602) at 10:15.

Warrant Daily Report: SHFE data showed that on December 31, the total registered warrant volume for cast aluminum alloy was 69,588 mt, a decrease of 810 mt from the previous trading day. The breakdown by region was as follows: Shanghai (4,757 mt, unchanged), Guangdong (22,237 mt, down 92 mt), Jiangsu (12,292 mt, down 59 mt), Zhejiang (23,963 mt, down 659 mt), Chongqing (5,919 mt, unchanged), and Sichuan (420 mt, unchanged).

Aluminum Scrap: Last Wednesday, the spot price of primary aluminum increased from the previous trading day, with the SMM A00 spot aluminum closing at 22,460 yuan/mt; the aluminum scrap market followed the rise in primary aluminum prices. Baled UBC was quoted in the range of 16,800-17,200 yuan/mt (tax-exclusive), while shredded aluminum tense scrap (priced based on aluminum content) was quoted in the range of 18,400-18,900 yuan/mt (tax-exclusive). Prices in Shanghai, Zhejiang, Jiangsu, Tianjin, and Shandong were raised by 200-300 yuan/mt today, while prices in Guizhou, Henan, Jiangxi, and Hubei were raised by 100 yuan/mt or were largely stable. In terms of price trend, 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-exclusive). In the short term, key factors to monitor include 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: Price: Spot silicon metal prices fluctuated rangebound around the New Year's Day holiday. In east China, SMM oxygen-blown #553 silicon was at 9,200-9,300 yuan/mt, and #421 silicon was at 9,500-9,800 yuan/mt; spot prices were basically stable. Before the holiday, the most-traded SI contract also fluctuated rangebound. Downstream users maintained a strong wait-and-see sentiment, with procurement focused on rigid demand. Capacity: Production cuts for some capacity in Xinjiang were implemented in early January, leading to a MoM weakening in silicon metal supply. Social Inventory: According to SMM data, on December 31, the total social inventory of silicon metal in major regions was 557,000 mt, up 2,000 mt WoW (excluding Inner Mongolia, Ningxia, Gansu, etc.).

Overseas Market: Current overseas ADC12 offers are in the range of $2,660–2,690/mt. As domestic prices rose again, the real-time profit margin for imports expanded to around 500 yuan/mt.

Summary: In the spot market, last Wednesday, aluminum and copper prices strengthened again in tandem. The SMM A00 aluminum price rose by 280 yuan/mt to 22,460 yuan/mt, driving up the cost center for recycled aluminum raw materials. The SMM ADC12 price followed, increasing by 150 yuan/mt to 22,450 yuan/mt. Despite high sentiment for price increases on the cost side, demand-side performance remains weak. Die-casting enterprises, impacted by reduced orders and high aluminum prices, exhibit strong risk-averse sentiment in procurement, leading to a stalemate in transactions. Moreover, the number of shutdown days during the New Year's holiday (1–3 days) increased compared to previous years. During the week, driven by the widening spot-futures price spread, traders actively offloaded goods, accelerating the destocking pace of social inventory. In summary, although there is support from the cost and supply sides, weak demand and fear of highs have limited the upside room for prices. It is expected that the ADC12 price will 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.]