Futures Rebound Boosted Spot Quotes Across the Board [SMM Cast Aluminum Alloy Morning Comment]

3.12 SMM Morning Comment on Cast Aluminum Alloy

Futures: Overnight, the most-traded aluminum alloy 2604 contract closed at 24,110 yuan/mt, up 225 yuan from the previous trading day's settlement price, or +0.94%. Open interest was 5,929 (+29), and trading volume was 2,640 (-2,973). Open interest increased slightly while trading volume pulled back, indicating somewhat weaker capital participation. All three lines were within the 50-80 range, and the J line turned upward, indicating a relatively bullish and strong zone, though it had not yet entered the overbought range (>80), suggesting short-term upward momentum remained.

Industry News: According to CAAM data, in February, automobile production and sales reached 1.672 million units and 1.805 million units, down 31.7% and 23.1% MoM, and down 20.5% and 15.2% YoY, respectively. From January to February, automobile production and sales totaled 4.122 million units and 4.152 million units, down 9.5% and 8.8% YoY, respectively. In February, NEV production and sales reached 694,000 units and 765,200 units, down 21.8% and 14.2% YoY, respectively. From January to February, NEV production and sales totaled 1.735 million units and 1.71 million units, down 8.8% and 6.9% YoY, respectively, and NEV sales accounted for 41.2% of total sales of new vehicles. According to CAAM's analysis, this year's Chinese New Year fell in the middle to late February, and the holiday was extended, leaving only 16 effective working days in February. Enterprise production and operations were affected to some extent, and overall market activity declined somewhat. Judging from industry performance from January to February, automobile production and sales were affected by multiple factors, including policy transition adjustments, front-load demand release, the timing shift of the Chinese New Year holiday, insufficient consumption willingness, and a high base in the same period last year, resulting in a YoY decline. Among them, the passenger vehicle market and the NEV sector both declined YoY, while the commercial vehicle market continued to improve and automobile exports grew rapidly.

Spot-Futures Price Spread Daily: According to SMM data, on March 11, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2604) was 1,055 yuan/mt.

Warrant Daily: SHFE data showed that as of March 11, the total registered volume of cast aluminum alloy warrants was 55,900 mt, down 1,144 mt from the previous trading day. By region, Shanghai totaled 5,080 mt, down 180 mt; Guangdong 19,242 mt, down 210 mt; Jiangsu 6,905 mt, down 302 mt; Zhejiang 18,722 mt, down 362 mt; Chongqing 4,144 mt, down 90 mt; and Sichuan 1,807 mt, up 0 mt.

Aluminum scrap: Continued fluctuations in geopolitical risks drove spot primary aluminum sharply higher yesterday by 560 yuan/mt from the previous trading day, and the aluminum scrap market followed with broad-based gains. Against the backdrop of sharp aluminum price fluctuations, sentiment toward price adjustments varied across regions. East China tracked the rise quickly, with single-day gains reaching 300-500 yuan/mt, while central China and south China adjusted prices by 200-300 yuan/mt on the day. The aluminum scrap market was expected to hold up well at high levels this week. Post-holiday production order was gradually restored, and the release of supply became further more ample, but downstream processing enterprises saw a slow recovery in orders. Overall transactions were expected to remain sluggish, and the tug-of-war between sellers and buyers 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, the progress of downstream resumption, and changes in recycling policies, with vigilance against heightened price fluctuation risks.

Silicon metal: On March 11, SMM east China non-oxygen blown #553 was flat from the previous day; oxygen-blown #553 was flat from the previous day; #521 was flat from the previous day; #441 was flat from the previous day; #421 was flat from the previous day; #421 for silicone use was flat from the previous day; and #3303 was flat from the previous day. Silicon prices in Kunming, Sichuan, Xinjiang, Shanghai, Huangpu Port, Tianjin, and north-west China were unchanged.

Overseas market: On the import side, affected by the sharp rise in LME aluminum prices and stronger demand outside China, overseas ADC12 quotes rose to $3,320-3,420/mt, while domestic prices posted relatively limited gains, and the import window quickly turned into a loss.

Summary: Spot market: Boosted by the rebound in futures prices, ADC12 quotes moved higher across the board today, and the SMM average ADC12 price was raised by 300 yuan/mt. Driven by the cost side, producers actively recouped earlier losses, generally raising prices by 200-400 yuan/mt. However, affected by wild swings in prices during the week, downstream purchasing sentiment remained cautious, with most buyers maintaining a wait-and-see stance and only restocking for immediate needs, while the overall pace of market transactions stayed steady. In the short term, supported by costs and amid a mild release in supply, ADC12 prices were expected to hold up well.

[Data Source Statement: Except for public information, all other data is processed and derived by SMM based on public information, market communication, and SMM's internal database models, and is for reference only and does not constitute decision-making advice.]