Primary Aluminum Drove a Sharp Rally in Alloys, While the Raw Material Side Continued to Strengthen [SMM Cast Aluminum Alloy Morning Comment]

3.1 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the most-traded 2604 aluminum alloy contract closed at 23,645 yuan/mt, down 25 yuan from the previous trading day’s settlement price, a decline of 0.11%. The high was 23,705 yuan/mt and the low was 23,310 yuan/mt, with a fluctuation of 395 yuan. The current VR value was 101.18, in the neutral range, indicating a relatively balanced tug-of-war between bulls and bears, with no obvious extreme expansion or contraction in trading activity. Trading volume and open interest fell in tandem, market trading sentiment cooled, and a wait-and-see mood was strong; in the short term, prices were likely to maintain sideways movement.

Spot-Futures Price Spread Daily: According to SMM data, on March 9, the SMM ADC12 spot price posted a theoretical premium of 880 yuan/mt over the 10:15 closing price of the cast aluminum alloy the most-traded contract (AD2604).

Warrant Daily: SHFE data showed that on March 9, total registered cast aluminum alloy warrants were 58,099 mt, down 630 mt from the previous trading day. Of this, Shanghai totaled 5,409 mt, down 209 mt; Guangdong 19,813 mt, down 487 mt; Jiangsu 7,419 mt, down 58 mt; Zhejiang 19,417 mt, down 541 mt; Chongqing 4,234 mt, down 60 mt; and Sichuan 1,807 mt, up 725 mt.

Aluminum scrap: Geopolitical positives continued to fluctuate, driving yesterday’s spot primary aluminum to rise sharply by 750 yuan/mt from the previous trading day, and the aluminum scrap market rose across the board in tandem. For the price difference between A00 aluminum and aluminum scrap, on March 9, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,748 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,834 yuan/mt. The aluminum scrap market was expected to hold up well at elevated levels this week, with the mainstream range for shredded aluminum tense scrap (priced based on aluminum content) running around 20,300-20,900 yuan/mt (tax excluded). Post-holiday production order gradually recovered, and supply release further loosened, but downstream processing enterprises’ order recovery was slow; overall transactions were expected to remain sluggish, and the supply and demand tug-of-war was set to intensify in the short term. Close attention should be paid to the impact of the US-Iran conflict on primary aluminum supply and transportation, downstream resumption progress, and changes in recycling policies, and vigilance is needed against heightened price fluctuation risks.

Silicon metal: Last week, silicon metal prices fell first and then rose; SMM east China oxygen-blown #553 silicon was at 9,000-9,200 yuan/mt, and 441# silicon at 9,200-9,500 yuan/mt. Affected by policies and news flow, futures prices recovered; silicon suppliers’ quoted price center edged up from earlier levels, and downstream traded on an as-needed basis. Demand reflected routine post–Chinese New Year work and production resumptions, and silicon metal prices were mainly volatile.

Overseas market: On the import side, driven by a sharp rise in LME aluminum prices and an uptick in overseas demand, overseas ADC12 offers rose to $3,240-3,320/mt, while domestic price gains were relatively limited, and the import window quickly turned loss-making.

Summary: Yesterday, the SMM ADC12 price rose by 500 yuan/mt, with the price center of market quotations moving up significantly. Most producers’ price adjustments were concentrated in the 500–600 yuan/mt range. Recently, raw material prices have continued to strengthen, and the cost side has risen rapidly, providing a clear lift to enterprise quotations. However, downstream demand has remained relatively stable. Most enterprises reported that overall orders and inquiry activity were average, and downstream purchasing is still mainly restocking on an as-needed basis. Supported by cost push and market expectations, enterprises have shown a clear willingness to raise prices. In the short term, against the backdrop of cost support and mild supply release, ADC12 prices are expected to hold up well. The medium-term trend will still depend on the recovery of end-use consumption. If industry orders in the die-casting sector increase significantly, the price center is expected to move further upward; if demand recovery falls short of expectations, coupled with a continued rise in the operating rate on the supply side, prices will shift from elevated levels into rangebound consolidation.

[Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and SMM’s internal database models. They are for reference only and do not constitute decision-making advice.]