Trading activity slowed down before the holiday, with cast aluminum alloy fluctuating at highs in the doldrums. [SMM Morning Comment on Cast Aluminum Alloy]

SMM Cast Aluminum Alloy Morning Comment on 2.1

Futures: The most-traded aluminum alloy 2604 contract overall showed a pattern of falling first then rising, fluctuating within a range overnight. After opening, the price briefly dipped to around 22,120 yuan/mt, where buying interest at lower levels was evident, leading to a quick rebound in futures. In the first half of the night session, prices rose to the 22,270-22,280 yuan/mt level. Subsequently, pressured by resistance above, the price failed to break through effectively, and upward momentum gradually weakened, with futures turning to fluctuate and pull back. After midnight, the contract moved rangebound within the 22,200-22,250 yuan/mt range, eventually closing at 22,225 yuan/mt, up 60 yuan/mt or 0.27% from the previous close, mainly driven by bulls increasing positions. Overall, the overnight rebound was primarily a technical correction, with bulls and bears still in a contest phase.

Basis Report: According to SMM data, on February 9, the theoretical premium of the SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy contract (AD2604) at 10:15 AM was 1,390 yuan/mt.

Warrant Report: SHFE data showed that on February 9, the total registered volume of cast aluminum alloy warrants was 68,535 mt, an increase of 1,452 mt from the previous trading day. By region: Shanghai's total registered volume was 6,429 mt, up 1,071 mt; Guangdong's total was 23,756 mt, down 152 mt; Jiangsu's total was 9,102 mt, down 244 mt; Zhejiang's total was 22,400 mt, up 176 mt; Chongqing's total was 5,406 mt, down 150 mt; Sichuan's total was 1,442 mt, up 751 mt.

Aluminum Scrap: Yesterday, spot primary aluminum prices rose compared to the previous trading day, with the SMM A00 spot price closing at 23,400 yuan/mt. Aluminum scrap market prices generally followed the increase today. Baled UBC was mainly quoted at 16,800-17,250 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was mainly quoted at 19,000-19,700 yuan/mt (ex-tax). Regarding the price difference between primary aluminum and scrap: on February 9, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,543 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,736 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) projected at 19,000-19,800 yuan/mt (ex-tax). Close attention should be paid to the shutdown and resumption of downstream processing enterprises and the progress of environmental protection enforcement in various regions, while remaining vigilant against a potential renewed pullback in aluminum prices leading to persistently sluggish trading sentiment in the aluminum scrap market.

Silicon Metal: On February 9, SMM prices in east China were non-oxygen blown #553 at 9,100-9,300 yuan/mt; oxygen-blown #553 at 9,200-9,400 yuan/mt; #521 at 9,300-9,500 yuan/mt; #441 at 9,300-9,600 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. Prices for silicon in some areas of Huangpu Port and Tianjin also declined. Silicon prices in the Northwest, Kunming, Shanghai, Xinjiang, and Sichuan regions held steady.

Overseas Market: On the import side, overseas ADC12 offers remained in the range of $2,840-2,900/mt, with the import profit margin rebounding to near the break-even line.

Summary: On Monday, A00 aluminum prices rose by 260 yuan/mt compared to the previous trading day to 23,400 yuan/mt, while SMM ADC12 prices increased by 100 yuan/mt to 23,650 yuan/mt. Entering the last trading week before the Chinese New Year, as downstream and upstream enterprises in the secondary aluminum industry gradually began holidays, market transactions noticeably slowed. Enterprise quotations were mostly adjusted in line with market conditions. Supply side, most secondary aluminum enterprises successively suspended production between February 5 and 13, with restart times mainly concentrated around the eighth day of the first lunar month or the Lantern Festival. The average furnace shutdown period was expected to be 8-20 days, about 2 days longer YoY. Overall, downstream demand continued to contract, and fundamental support for prices weakened marginally. Before the holiday, secondary aluminum alloy prices generally fluctuated at highs but were in the doldrums, with the price center dropping back slightly.

[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.]