Overnight, the most-traded aluminum alloy futures fluctuated rangebound, with market trading becoming increasingly sluggish [SMM Cast Aluminum Alloy Morning Comment]

2.11 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded aluminum alloy 2604 contract opened at 22,095 yuan/mt overnight, rose to a high of 22,165 yuan/mt, fell to a low of 22,035 yuan/mt, and mainly fluctuated rangebound, eventually closing at 22,135 yuan/mt, up 15 yuan/mt or 0.07% from the previous close. Bulls mainly increased positions.

Spot-Futures Price Spread Report: According to SMM data, on February 10, the theoretical premium of SMM ADC12 spot price over the most-traded cast aluminum alloy contract (AD2604) closing price at 10:15 was 1,450 yuan/mt.

Warrant Report: SHFE data showed that on February 10, the total registered warrants for cast aluminum alloy were 67,300 mt, down 1,235 mt from the previous trading day. The breakdown by region was Shanghai (total registered volume 6,369 mt, down 60 mt), Guangdong (23,664 mt, down 92 mt), Jiangsu (8,921 mt, down 181 mt), Zhejiang (22,279 mt, down 121 mt), Chongqing (4,714 mt, down 692 mt), and Sichuan (1,353 mt, down 89 mt).

Aluminum Scrap: Spot primary aluminum prices edged down slightly yesterday compared to the previous trading day, with SMM A00 spot aluminum closing at 23,290 yuan/mt. Aluminum scrap market prices held steady overall today. Baled UBC was quoted in the range of 16,800-17,250 yuan/mt (ex-tax), while shredded aluminum tense scrap (priced based on aluminum content) was quoted in the range of 19,000-19,700 yuan/mt (ex-tax). Prices in Shandong, Shanghai, Zhejiang, and Jiangsu adjusted slightly by 50-100 yuan/mt following aluminum prices, while prices in Jiangxi, Henan, and Guizhou remained stable. 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 19,000-19,800 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, and be alert to the continued sluggish trading atmosphere in the aluminum scrap market after another aluminum price correction.

Silicon Metal: On February 10, SMM non-oxygen blown #553 silicon metal in east China was 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 10,200-10,400 yuan/mt. Some silicon prices in Huangpu Port, Tianjin, and north-west China also declined. Prices in Kunming, Shanghai, Xinjiang, and Sichuan remained stable.

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

Summary: On Tuesday, SMM ADC12 prices held steady at 23,650 yuan/mt. As the Chinese New Year approached, enterprises across the secondary aluminum industry chain entered a concentrated holiday period, leading to a noticeable decline in market liquidity. Actual transactions remained sluggish, with spot quotations primarily making minor adjustments around futures prices. On the supply side, secondary aluminum enterprises gradually began halting production, with furnace shutdowns mainly concentrated between February 5 and 13. Production resumptions were mostly scheduled around the eighth day of the first lunar month or the Lantern Festival. The expected shutdown period ranged from 8 to 20 days, overall longer YoY. Against a backdrop of unimproved demand, fundamental support for prices continued to weaken. The price center for secondary aluminum alloy showed a slow downward trend before the holiday, and in the short term, prices are expected to remain in the doldrums.

[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.]