Holiday Stockpiling Meets Chill, Cast Aluminum Alloy's Short-Term Highs Hard to Change [SMM Cast Aluminum Alloy Morning Comment]

1.29 SMM Cast Aluminum Alloy Morning Comment

Futures: Last night, the most-traded AD2603 futures contract opened and then rose rapidly, hitting a high of 23,990 yuan/mt, with the gain once approaching 1.91%. It then pulled back quickly and finally closed at 23,590 yuan/mt, down 195 yuan/mt or 0.82% from the previous close, mainly due to long position reduction. Overall, it showed a pattern of "retreat after rapid rise," and the KD indicator also retreated from highs, indicating short-term bullish momentum weakened.

Spot-Futures Price Spread Daily: According to SMM data, on January 28, the theoretical spot-futures price spread between the SMM ADC12 spot price and the 10:15 closing price of the most-traded cast aluminum alloy futures contract (AD2603) was 960 yuan/mt.

Warrant Daily: SHFE data showed that on January 28, the total registered volume of cast aluminum alloy warrants was 67,659 mt, an increase of 125 mt from the previous trading day. By region: Shanghai's total registered volume was 5,120 mt (up 607 mt); Guangdong's total registered volume was 23,526 mt (unchanged); Jiangsu's total registered volume was 10,787 mt (down 211 mt); Zhejiang's total registered volume was 21,646 mt (down 271 mt); Chongqing's total registered volume was 5,889 mt (unchanged); Sichuan's total registered volume was 691 mt (unchanged).

Aluminum scrap side: On Wednesday, spot primary aluminum prices rose significantly compared to the previous trading day, with the SMM A00 spot price closing at 24,260 yuan/mt. Aluminum scrap market prices generally followed the increase today. Yesterday, baled UBC was quoted at 17,500-18,000 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was quoted at 19,800-20,200 yuan/mt (ex-tax). Regarding the price difference between A00 aluminum and aluminum scrap: on January 28, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,375 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,461 yuan/mt. Shanghai, Jiangsu, Shandong, and Jiangxi closely followed the aluminum price rise, while Henan, Foshan, Guizhou, and Anhui adjusted prices more cautiously that day, rising by 100-200 yuan/mt. Recently, directly affected by recycling policies and forced to follow the high aluminum prices, the market has shown a situation of "nominal prices without actual transactions." Scrap utilization enterprises in related provinces were forced to reduce or halt production, downstream buying sentiment was dampened, and purchasing was as needed. The aluminum scrap market is expected to hover at highs this week, with shredded aluminum tense scrap (priced based on aluminum content) mainly in the range of 19,700-20,200 yuan/mt (ex-tax). Downward pressures remain: as the Chinese New Year approaches, enterprises are gradually entering holiday schedules; scrapyard holidays starting early reduce market liquidity; downstream operations remain sluggish with strong resistance to high prices. It is necessary to closely track primary aluminum trends, weather changes, and pre-holiday production halt schedules, and be alert to the risk of a pullback from highs.

Silicon Metal: On January 28, SMM non-oxygen blown #553 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 9,400-9,600 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. Some silicon prices in north-west China continued to rise.

Overseas Market: Current overseas ADC12 offers remained stable at $2,850-2,880/mt, while domestic spot prices adjusted actively, with import arbitrage widening to around 600 yuan/mt.

Summary: On Wednesday, aluminum prices were quoted at 24,260 yuan/mt, up 390 yuan/mt; SMM ADC12 rose 150 yuan/mt to 24,150 yuan/mt. As ADC12 showed relative resilience during the early-week aluminum price pullback, secondary aluminum enterprises adjusted prices cautiously before noon, generally following the increase by 100-200 yuan/mt. However, after 11 a.m., as futures continued to surge, market participants showed stronger willingness to catch up with gains, leading to a further increase of 200-300 yuan/mt on top of the previous adjustments. In terms of transactions, the "price without market" feature became more pronounced, with downstream buyers showing strong fear of high prices, resulting in thin overall trading. Affected by this, pre-holiday stockpiling enthusiasm was dampened again, and some enterprises have planned to enter holiday mode early. Demand is expected to continue weakening. Overall, although high aluminum prices and seasonal off-season demand suppress market activity, support from aluminum scrap prices on the cost side, coupled with supply tightening due to policy and environmental protection factors, suggests that secondary aluminum alloy prices are expected to continue fluctuating at highs in the short term. Subsequent focus should be on raw material circulation, downstream operating rates, and pre-holiday stockpiling sentiment.

[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 constituting decision-making advice.]