Aluminum Prices Cease Rising and Retreat, Supply Shortage Continues to Support Aluminum Alloy [SMM Cast Aluminum Alloy Morning Comment]

1.9 SMM Cast Aluminum Alloy Morning Comment

Futures: The aluminum alloy 2603 contract rose to 23,480 and then quickly pulled back, opening at 22,720, reaching a high of 22,820, and dropping to a low of 22,180, finally closing at 22,495, down 90 points (-0.40%) from the previous value. The high-low price difference reached 325 points (1.42%), showing a weak pattern of retreating after a rapid rise and sideways movement. Trading volume was 6,679 (down 4,592 from the previous day), and open interest was 20,952 (down 56). The synchronized reduction in volume and open interest indicates a decrease in short-term capital participation, with the market lacking active trading momentum during the pullback, and both long and short positions temporarily in a wait-and-see state.

Daily Basis Report: According to SMM data, on January 8, the SMM ADC12 spot price had a theoretical premium of 595 yuan/mt over the closing price at 10:15 am of the most-traded cast aluminum alloy contract (AD2603).

Daily Warrant Report: SHFE data showed that on January 8, the total registered amount of cast aluminum alloy warrants was 69,737 mt, an increase of 391 mt from the previous trading day. Among them, the total registered amount in Shanghai was 4,757 mt, unchanged from the previous trading day; in Guangdong, it was 22,207 mt, down 31 mt; in Jiangsu, it was 12,591 mt, up 571 mt; in Zhejiang, it was 23,542 mt, down 149 mt; in Chongqing, it was 5,919 mt, unchanged; and in Sichuan, it was 721 mt, also unchanged.

Aluminum Scrap: On Thursday, the spot primary aluminum price fell slightly compared to the previous trading day, with SMM A00 spot closing at 24,000 yuan/mt, and the aluminum scrap market followed the decline in primary aluminum prices. Baled UBC scrap aluminum prices were concentrated at 17,700-18,100 yuan/mt (excluding tax), and shredded aluminum tense scrap (priced based on aluminum content) prices were concentrated at 19,300-19,800 yuan/mt (excluding tax). Prices in Shanghai, Zhejiang, Jiangsu, Tianjin, Shandong, and Jiangxi today retreated by 100-200 yuan/mt. It is expected that next week, the aluminum scrap market will hover at highs, with the main range for shredded aluminum tense scrap (priced based on aluminum content) being 18,800-19,200 yuan/mt (excluding tax). The tug-of-war between sellers and buyers continues, and it is necessary to closely monitor the trend of primary aluminum, the progress of downstream production halts, and pre-holiday transaction conditions, while being vigilant about the risk of a pullback from highs.

Silicon Metal: This week, the spot silicon metal prices remained stable, while futures prices held up well before a significant downward adjustment. SMM east China oxygen-blown #553 silicon was priced at 9,200-9,300 yuan/mt, and #441 silicon at 9,300-9,500 yuan/mt. In the futures market, the SI most-traded contract saw a steeper decline in the afternoon, closing at 8,535 yuan/mt, down 445 yuan/mt from the previous day. There was a large disparity in quotes from different types of silicon suppliers, with downstream buyers and traders buying the dip. Overseas Market: Current overseas ADC12 prices are steady in the 2,820–2,850 $/mt range, with real-time profit margins still around 500 yuan/mt.

Summary: Aluminum prices stopped rising and corrected, with the SMM A00 aluminum price falling by 140 yuan/mt to 24,000 yuan/mt, while the SMM ADC12 price remained stable at 23,700 yuan/mt. Although the A00 aluminum price experienced a slight correction, it stayed above 24,000 yuan. In the secondary aluminum market, most morning offers held steady, but some producers followed the decline by 100-200 yuan/mt in the afternoon, influenced by a significant drop in futures. Amid the falling prices, downstream buyers exhibited a strong wait-and-see sentiment, with only limited restocking for rigid demand, resulting in sluggish transactions. The current secondary aluminum market is influenced by a mix of bullish and bearish factors: cost support and tight supply provide a floor for prices, but weak downstream demand and fear of high prices exert downward pressure. It is expected that ADC12 prices will show a high-level correction trend 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.]