Imports of Aluminum Scrap and Aluminum Alloys Both Increased in December, with Thailand's Aluminum Scrap Imports Accounting for 23.3% of Total Imports [SMM Cast Aluminum Alloy Morning Comment]

January 21 SMM Cast Aluminum Alloy Morning Comment

Futures: The aluminum alloy 2603 contract closed at 22,655 yuan/mt. The latest candlestick broke below the short-term support, hitting a low of 22,525, indicating that bears still dominated. Open interest was 19,393, down 127 from the previous value, suggesting funds were exiting during the current decline rather than actively increasing short positions, which may limit the sustainability of the bearish trend. Trading volume was 4,812, within the normal recent range, with no signs of high-volume selling. The K-value was 20.82, D-value 28.61, and J-value 5.22; all three lines have entered the oversold zone (below 20), indicating potential for a short-term technical rebound, but an extended oversold condition is also possible.

Spot-Futures Price Spread Daily Report: According to SMM data, on January 20, the SMM ADC12 spot price had a theoretical premium of 1,165 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2603) at 10:15.

Warrant Daily Report: SHFE data showed that on January 20, the total registered warrants for cast aluminum alloy were 69,066 mt, down 605 mt from the previous trading day. By region: Shanghai's total registered warrants were 4,605 mt, down 152 mt; Guangdong's were 23,707 mt, down 122 mt; Jiangsu's were 11,777 mt, down 121 mt; Zhejiang's were 22,517 mt, down 210 mt; Chongqing's were 5,769 mt, unchanged; Sichuan's were 691 mt, unchanged.

Industry Dynamics: Latest customs data showed that unwrought aluminum alloy imports in December 2025 were 93,100 mt, down 11.8% YoY but up 27.2% MoM. Cumulative imports for January-December 2025 were 1.0073 million mt, down 17.0% YoY. Unwrought aluminum alloy exports in December 2025 were 25,500 mt, up 20.0% YoY but down 16.8% MoM. Cumulative exports for January-December 2025 were 284,700 mt, up 17.5% YoY. Aluminum scrap: Domestic aluminum scrap imports in December 2025 were approximately 162,800 mt, up about 25% YoY. By source country, the main sources of aluminum scrap imports in December were Thailand, the UK, Japan, the US, and other countries/regions, with Thailand accounting for 23.3% of total domestic imports.

Aluminum Scrap Side: On Tuesday, spot primary aluminum prices pulled back compared to the previous trading day, with SMM A00 spot aluminum closing at 23,680 yuan/mt. The aluminum scrap market followed the decline in primary aluminum prices. Today, baled UBC was quoted in a range of 17,150-17,650 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was quoted in a range of 18,900-19,400 yuan/mt (ex-tax). Prices in Shanghai, Zhejiang, Jiangsu, Tianjin, and Shandong fell by 100-200 yuan/mt today. On January 20, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,510 yuan/mt, while the price difference between A00 aluminum and shredded aluminum tense scrap was 2,489 yuan/mt. The aluminum scrap market is expected to hover at highs this week, with shredded aluminum tense scrap (priced based on aluminum content) mainly trading in the range of 19,600-20,100 yuan/mt (tax excluded). The tug-of-war between sellers and buyers continues, and it is necessary to closely track the movement of primary aluminum, the progress of downstream production halts, and pre-holiday trading activity, while remaining vigilant against the risk of a pullback from highs.

Silicon metal side: Prices: The silicon metal market moved sideways. SMM oxygen-blown #553 silicon in east China was quoted at 9,200-9,300 yuan/mt, and #441 silicon at 9,300-9,500 yuan/mt, both holding steady from the previous day. On the futures side, the most-traded silicon futures contract traded in the range of 8,600-8,900 yuan/mt yesterday, with the fluctuation range widening WoW. Trading sentiment remained cautious amid weak supply and demand. Market participants are watching for the implementation of production cut plans on the supply side. Production: In mid-January, additional production cuts were implemented at some silicon furnaces in Sichuan and Inner Mongolia. Overall, the operating rate of silicon metal maintained a weak trend in January. Large plants in Xinjiang have batch production cut plans by the end of January, and silicon metal supply is expected to decrease further.

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

Summary: In the spot market, the A00 aluminum price fell by 190 yuan/mt to 23,680 yuan/mt yesterday, while the SMM ADC12 price dropped by 50 yuan/mt to 23,850 yuan/mt. Aluminum prices declined for the fourth consecutive day. However, supported by limited cost declines due to tight raw material supply, low finished product inventories, and bullish expectations, although manufacturers' offers diverged, most held steady or saw minor adjustments of around 100 yuan/mt, with overall performance remaining firm. On the demand side, downstream purchases maintained a rigid pace due to fear of high prices and insufficient motivation for pre-holiday stockpiling, resulting in mediocre trading activity. Overall, secondary aluminum alloy prices are expected to continue fluctuating at highs in the short term. While the off-season and high aluminum prices have suppressed market activity, uncertainty regarding regional tax policies and supply tightness caused by environmental protection-driven production restrictions 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 do not constitute decision-making advice.]