Aluminum Prices Rise Slightly for Consecutive Sessions, Alloy Prices Remain Stable [SMM Cast Aluminum Alloy Morning Comment]

1.23 SMM Cast Aluminum Alloy Morning Comment

Futures: The 2603 aluminum alloy contract closed at 22,865 yuan/mt, up 60 yuan from the previous trading day, with a gain of 0.26%. Volume was 3,789 lots, and open interest stood at 17,429 lots (down 485 lots from the previous trading day), indicating capital outflow and significant short-term divergence. K=48.6, D=37.84, J=70.13; the J line rose rapidly, approaching the overbought zone (80), suggesting strong short-term bullish momentum, but caution is advised against the risk of a pullback after a rapid rise. The candlestick chart recently hit bottom at 22,525 yuan, then stabilized and rebounded, showing a fluctuating upward trend, but attention should be paid to the resistance level around 22,900 yuan.

Daily Basis Report: According to SMM data, on January 22, the theoretical premium of the SMM ADC12 spot price over the most-traded casting aluminum alloy contract (AD2603) was 1,140 yuan/mt at the 10:15 closing price.

Daily Warrant Report: SHFE data showed that on January 22, the total registered volume of casting aluminum alloy warrants was 68,889 mt, down 457 mt from the previous trading day. In Shanghai, the total registered volume was 4,513 mt, down 62 mt; in Guangdong, it was 23,617 mt, unchanged; in Jiangsu, it was 11,478 mt, down 122 mt; in Zhejiang, it was 22,244 mt, down 273 mt; in Chongqing, it was 5,889 mt, unchanged; and in Sichuan, it was 691 mt, unchanged.

Aluminum Scrap: On Thursday, the spot primary aluminum price fluctuated rangebound compared to the previous trading day. The SMM A00 spot closed at 23,740 yuan/mt, and the aluminum scrap market remained stable. Baled UBC prices were concentrated between 17,200-17,700 yuan/mt (excluding tax), and shredded aluminum tense scrap (priced based on aluminum content) prices were concentrated between 19,200-19,700 yuan/mt (excluding tax). For the price difference, on January 21, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,560 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,539 yuan/mt. It is expected that the aluminum scrap market will hover at highs next week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) at 19,000-19,600 yuan/mt (excluding tax). Suppressing factors still exist, as enterprises are entering their holiday cycles due to the approaching Chinese New Year, leading to reduced market liquidity. Downstream operations remain sluggish, and there is a strong sentiment against high prices. Close attention should be paid to the trend of primary aluminum, weather changes, and pre-holiday production halts, while being cautious of the risk of a pullback from highs.

Silicon Metal: This week, the spot silicon metal price continued to consolidate. 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. At the beginning of the week, news emerged that large plants in Xinjiang would cut production by the end of January, but the market reaction was generally cautious. Pre-holiday stockpiling orders were not concentrated, and the spot trading atmosphere was moderate. Futures market prices experienced widened fluctuations due to news influences.

Overseas market: Overseas ADC12 offers remain steady at $2,860–2,890/mt, with import arbitrage profits hovering around 200 yuan/mt.

Summary: A00 aluminum prices rose again by 30 yuan/mt to 23,740 yuan/mt, while SMM ADC12 prices held steady at 23,850 yuan/mt. Aluminum prices continue to rebound slightly, but secondary aluminum market participants show weak willingness to adjust prices, keeping overall offers stable. Approaching the Chinese New Year, secondary aluminum enterprises have gradually initiated raw material stocking plans. However, as aluminum prices continue to fluctuate at highs, market sentiment remains cautious, and enterprises have only slightly increased raw material inventories. Demand side, downstream procurement is primarily driven by rigid demand due to "fear of highs" psychology and weak pre-holiday stocking demand, resulting in sluggish market trading activity. Overall, short-term secondary aluminum alloy prices are expected to continue fluctuating at highs. Although the off-season and high aluminum prices have suppressed market activity, adverse weather conditions hindering raw material circulation, coupled with uncertainties in regional tax policies and supply tightness caused by environmental protection-driven production restrictions, collectively provide a floor 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.]