Aluminum Prices Cease Rising and Pull Back, Weak Downstream Stockpiling Demand Creates Upward Price Pressure [SMM Cast Aluminum Alloy Morning Comment]

1.16 SMM Cast Aluminum Alloy Morning Comment

Futures: The aluminum alloy 2603 contract closed at 23,070 yuan/mt, down 190 yuan, or 0.82%. Trading volume was 8,902 lots, and open interest was 21,487 lots (a decrease of 141 lots from the previous value). The J-line quickly fell below the 30 level, indicating short-term price correction pressure; the K-line crossed below the D-line at highs, forming a "death cross" signal, suggesting weakening bullish momentum and the market may enter a phase of adjustment.

Basis Daily: According to SMM data, on January 15, the SMM ADC12 spot price was at a theoretical premium of 735 yuan/mt to the closing price of the cast aluminum alloy most-traded contract (AD2603) at 10:15.

Warrant Daily: SHFE data showed that on January 15, the total registered warrant volume for cast aluminum alloy was 70,668 mt, an increase of 1,837 mt from the previous trading day. By region, the total registered volume in Shanghai was 4,757 mt (unchanged), Guangdong 23,951 mt (up 1,957 mt), Jiangsu 12,349 mt (down 149 mt), Zhejiang 22,941 mt (up 29 mt), Chongqing 5,979 mt (up 60 mt), and Sichuan 691 mt (unchanged).

Aluminum scrap side: This Thursday, spot primary aluminum prices corrected from the previous trading day, with SMM A00 spot closing at 24,190 yuan/mt, and aluminum scrap market prices followed the decline. Supply side, environmental protection-driven production restrictions in central China were lifted, but inventory levels of wrought aluminum alloy scrap remained saturated. Baled UBC scrap was quoted at 17,500-17,900 yuan/mt (tax excluded), and shredded aluminum tense scrap (priced based on aluminum content) was quoted at 19,250-19,750 yuan/mt (tax excluded). In terms of price difference between A00 aluminum and aluminum scrap, on January 15, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,903 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,666 yuan/mt. The aluminum scrap market is expected to hover at highs this week, with shredded aluminum tense scrap (priced based on aluminum content) forecast to trade in the mainstream range of 19,600-20,100 yuan/mt (tax excluded) next week. The tug-of-war between sellers and buyers continues, and close attention should be paid to primary aluminum trends, downstream production halts, and pre-holiday transaction activity, while remaining cautious of high-level correction risks.

Silicon metal side: Prices: Spot silicon metal prices continued to hold steady this week, while futures prices fluctuated rangebound. SMM oxygen-blown #553 silicon in east China was at 9,200-9,300 yuan/mt, and #441 silicon at 9,300-9,500 yuan/mt. Recently, the silicon metal fundamentals were weak, with both supply and demand decreasing, and no significant consumption increase was expected on the demand side. The macro front was strong, providing support for futures prices. Spot silicon metal prices are expected to maintain narrow fluctuations and rangebound consolidation in the near term. Production: This week, additional production cuts occurred at some silicon metal furnaces in Sichuan and Inner Mongolia, with major plants in Sichuan completing shutdowns, reducing the local silicon metal operating rate to 0%; the overall silicon metal operating rate trended weaker.

Overseas Market: Current overseas ADC12 offers are in the range of $2,880–2,890/mt, with import real-time profit remaining around 500 yuan/mt.

Summary: On Thursday, aluminum prices experienced a significant correction, with A00 prices falling by 480 yuan/mt to 24,190 yuan/mt, and SMM ADC12 prices dropping by 200 yuan/mt to 24,000 yuan/mt. After multiple days of increases, aluminum prices cooled but remained above 24,000 yuan/mt. Demand side, the price decline intensified the wait-and-see sentiment among downstream enterprises. Although some die-casting enterprises were forced to restock to maintain production, boosting market inquiry activity this week and showing marginal improvement in purchase willingness, actual transactions remained weak due to losses in production profits for some downstream enterprises, with order volumes at some secondary aluminum plants declining noticeably. In the short term, secondary aluminum alloy prices are expected to continue fluctuating at highs. On one hand, cost support has weakened, coupled with the dual pressure of the off-season and losses suppressing downstream demand, leading to sluggish market trading atmosphere; on the other hand, uncertainty in regional tax policies, rigid supply constraints from environmental protection-driven production restrictions, and support from macro tailwinds continue to provide a floor for prices.

[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.]