Aluminum Prices Fluctuate Rangebound, Downstream "Price Aversion" Continues to Suppress Procurement Demand [SMM Cast Aluminum Alloy Morning Comment]

1.22 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 that funds exited during the current decline rather than actively increasing short positions, which may limit the sustainability of the bearish trend. 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 a possibility of a short-term technical rebound, but the oversold condition could persist. The current reading of 123.03 is within the normal range, suggesting that trading volume did not show extreme expansion or contraction, and short-term fluctuations are mainly driven by price momentum.

Basis Daily: According to SMM data, on January 21, the SMM ADC12 spot price was at a theoretical premium of 1,130 yuan/mt to the closing price of the most-traded cast aluminum alloy contract (AD2603) at 10:15.

Warrant Daily: SHFE data showed that on January 21, the total registered warrants for cast aluminum alloy were 68,889 mt, down 177 mt from the previous trading day. By region, the total registered warrants were: Shanghai (4,575 mt, down 30 mt), Guangdong (23,617 mt, down 90 mt), Jiangsu (11,600 mt, down 177 mt), Zhejiang (22,517 mt, unchanged), Chongqing (5,889 mt, up 120 mt), and Sichuan (691 mt, unchanged).

Aluminum Scrap: On Wednesday, spot primary aluminum prices fluctuated rangebound compared to the previous trading day. The SMM A00 spot price closed at 23,710 yuan/mt, and the aluminum scrap market followed the decline in primary aluminum prices. Baled UBC was quoted at 17,150-17,650 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was quoted at 19,200-19,700 yuan/mt (ex-tax). Regarding the price difference between A00 aluminum and aluminum scrap, on January 21, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,530 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,509 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, and it is necessary to closely track the trend of primary aluminum, the progress of downstream production halts, and pre-holiday transaction conditions, while remaining cautious of the risk of a high-level correction.

Silicon Metal: On January 21, SMM prices in east China were: non-oxygen blown #553 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; and #3303 at 10,200-10,500 yuan/mt. Silicon prices in Kunming, Huangpu Port, Tianjin, Shanghai, Xinjiang, Sichuan, and north-west China remained stable. The price of silicon (Si≥97%) held steady today.

Overseas market: Current overseas ADC12 offers continued to stabilize at $2,860–2,890/mt, with import arbitrage profits hovering around 200 yuan/mt.

Summary: The A00 aluminum price rose by 30 yuan/mt to 23,710 yuan/mt, while the SMM ADC12 price held steady at 23,850 yuan/mt. Aluminum prices rebounded slightly today, but secondary aluminum market participants showed weak willingness to adjust prices, maintaining a wait-and-see stance overall. In the afternoon session, futures rose significantly, prompting some enterprises to actively raise prices by 100 yuan/mt. On the demand side, downstream procurement remained at rigid levels, with sentiment cautious toward high prices and insufficient pre-holiday stockpiling momentum, leading to a mediocre trading performance. Overall, secondary aluminum alloy prices are expected to continue fluctuating at highs in the short term. Although the off-season and high aluminum prices have dampened market activity, adverse weather conditions have hindered the flow of raw materials, coupled with uncertainties in regional tax policies and environmental protection-driven production restrictions tightening supply, collectively providing 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.]