Alloy Prices Remained Elevated, Significantly Suppressing Market Demand [SMM Cast Aluminum Alloy Morning Comment]

3.13 SMM Morning Comment on Cast Aluminum Alloy

Futures: Overnight, the most-traded cast aluminum alloy ad2604 contract closed at 24,005 yuan/mt, up 15 yuan from the previous trading day's settlement, or +0.06%. Open interest was 5,761 (-113), and trading volume was 2,032 (-2,190), indicating capital outflows and lower trading activity. K=65.15, D=63.62, J=68.2. The three lines remained intertwined with a bullish bias in the 50-80 range, but the J line had not entered overbought territory, suggesting short-term fluctuations were still possible.

Spot-futures price spread daily: According to SMM data, on March 12, 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 970 yuan/mt.

Warrant daily: SHFE data showed that on March 12, the total registered volume of cast aluminum alloy warrants was 55,360 mt, down 540 mt from the previous trading day. Among them, total registered volume in Shanghai was 4,930 mt, down 150 mt from the previous trading day; Guangdong was 19,242 mt, unchanged; Jiangsu was 6,756 mt, down 149 mt; Zhejiang was 18,540 mt, down 182 mt; Chongqing was 4,144 mt, down 90 mt; and Sichuan was 1,748 mt, down 59 mt.

Aluminum scrap: Continued fluctuations in geopolitical risks drove spot primary aluminum up 230 yuan/mt from the previous trading day, and the aluminum scrap market followed higher across the board. In terms of the price difference between A00 aluminum and aluminum scrap, on March 12, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,980 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 3,066 yuan/mt. The aluminum scrap market was expected to hold up well at high levels next week. Post-holiday production order gradually recovered, and the release of supply became further relaxed, but order recovery at downstream processing enterprises remained slow. Overall transactions were expected to stay sluggish, and the tug-of-war between sellers and buyers was likely 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 work resumption, and changes in recycling policies, with vigilance against heightened price fluctuation risks.

Silicon metal: This week, the silicon market was in stalemate, with the price center up WoW and market trading volume declining. Yesterday, SMM east China oxygen-blown #553 silicon stood at 9,100-9,300 yuan/mt, and #441 silicon at 9,300-9,600 yuan/mt. During the week, silicon suppliers raised their offer center, while spot silicon metal transactions remained in stalemate. Inventory in the middle link stayed high, downstream demand was weak, and cost support was relatively strong. Silicon metal prices were expected to see limited room on either side, with rangebound consolidation dominating.

Overseas market: On the import side, overseas ADC12 quotes rose to around $3,400/mt, and the immediate import loss in China widened to about 1,800 yuan/mt, keeping the import window closed.

Summary: Secondary aluminum alloy prices continued to rise this week, but the pace of demand follow-through was relatively slow. In the short term, raw material costs remained at high levels, providing strong support for ADC12 prices; however, if prices continue to rise, the suppressive effect of high prices on demand will become increasingly evident. Meanwhile, as operating rates gradually recover, supply is also expected to see a mild increase. ADC12 prices are expected to hover at highs in the short term. Going forward, focus is advised on the pace of downstream order releases, the pressure on the market from the supply recovery process, and the impact of the Middle East situation on aluminum prices.

[Data Source Statement: Except for publicly available information, all other data is 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.]