Aluminum Prices Continue to Decline, Stockpiling Drives Marginal Recovery in Purchase Willingness [SMM Cast Aluminum Alloy Morning Comment]

January 20 SMM Cast Aluminum Alloy Morning Comment

Futures: The aluminum alloy 2603 contract closed at 22,910 yuan/mt, up 0.09% from the previous settlement price. Trading volume was 4,332 lots, down 466 lots from the previous period; open interest was 20,105 lots, down 100 lots, indicating a pullback in current capital participation. The K-value was 28.63, D-value 36.33, and J-value 13.23, all in low territory. The J-line has turned upward from the oversold zone, showing short-term rebound momentum, but the K and D lines have not yet formed a clear golden cross, so the trend still needs confirmation.

Spot-Futures Price Spread Report: According to SMM data, on January 19, the SMM ADC12 spot price was at a theoretical premium of 1,070 yuan/mt to the closing price of the most-traded cast aluminum alloy contract (AD2603) at 10:15.

Warrant Report: SHFE data showed that on January 19, the total registered warrants for cast aluminum alloy were 70,032 mt, down 361 mt from the previous trading day. The total registered volume in Shanghai was 4,757 mt, unchanged from the previous trading day; Guangdong was 23,829 mt, unchanged; Jiangsu was 11,898 mt, down 240 mt; Zhejiang was 22,727 mt, up 89 mt; Chongqing was 5,769 mt, down 210 mt; Sichuan was 691 mt, unchanged.

Aluminum Scrap: On Monday, spot primary aluminum prices pulled back compared to the previous trading day, with SMM A00 spot aluminum closing at 23,870 yuan/mt. The aluminum scrap market followed the decline in primary aluminum prices. Baled UBC was quoted at 17,200-17,700 yuan/mt (ex-tax), shredded aluminum tense scrap (priced based on aluminum content) was quoted at 19,100-19,600 yuan/mt (ex-tax). Prices in Shanghai, Zhejiang, Jiangsu, Tianjin, Shandong, and other regions fell by 100-200 yuan/mt today. On January 19, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,583 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,454 yuan/mt. The aluminum scrap market is expected to hover at highs this week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) at 19,600-20,100 yuan/mt (ex-tax). The tug-of-war between sellers and buyers continues, requiring close tracking of primary aluminum trends, downstream production halts, and pre-holiday transaction activity, while remaining cautious of high-level pullback risks.

Silicon Metal: On January 19, SMM non-oxygen blown #553 silicon metal in east China was 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; #3303 at 10,200-10,500 yuan/mt. Prices in Kunming, Huangpu Port, Tianjin, Shanghai, Xinjiang, Sichuan, and north-west China held steady.

Overseas Market: Current overseas ADC12 offers remain firm, holding steady at $2,860–2,890/mt, with import arbitrage profits hovering around 300 yuan/mt.

Summary: On Monday, aluminum prices continued to retreat, with the A00 price falling another 160 yuan/mt to 23,870 yuan/mt, while the SMM ADC12 price held steady at 23,900 yuan/mt. Supported by firm costs, low inventory, and bullish expectations, secondary aluminum alloy producers largely maintained stable offers and adopted a wait-and-see stance. On the demand side, the decline in aluminum prices has heightened wait-and-see sentiment. Although some die-casting enterprises restocked due to production needs, leading to a marginal recovery in inquiries and purchase willingness, actual transactions remained sluggish due to losses downstream, with some companies already reducing or halting production. Pre-holiday stockpiling was also weak. In the short term, secondary aluminum alloy prices are expected to fluctuate at highs. On one hand, cost support has weakened, coupled with dual pressures from the off-season and losses, resulting in sluggish market activity. On the other hand, uncertainties in regional tax policies, supply tightens due to environmental protection-driven production restrictions, and macro tailwinds continue to provide solid bottom support for prices.

[Data Source Statement: Except for publicly available information, other data are derived by SMM based on public information, market communication, and SMM's internal database model, and are for reference only, not constituting decision-making advice.]