3.2 SMM Morning Comment on Cast Aluminum Alloy
Futures: Overnight, the aluminum alloy ad2604 contract fluctuated downward after opening, hitting a low of 22,180 yuan/mt and finally closing at 23,000 yuan/mt, down sharply 2.52% from the previous trading day's closing price. The futures showed a weak consolidation pattern, with prices fluctuating repeatedly in the low range and no clear rebound momentum emerging. Intraday, prices traded below the average price line, while the RSI indicator stayed in neutral territory, with the tug-of-war between longs and shorts tilting bearish. Trading volume and open interest declined in tandem, market trading was sluggish, and signs of capital exit were evident. On the daily chart, a long bearish candlestick formed, breaking below short-term moving average support. Technical indicators weakened, and the short-term bearish trend held the upper hand, with attention needed on the strength of subsequent support at low levels.
Basis Daily: According to SMM data, as of March 19, the theoretical spot premium of the SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2604) widened to 1,520 yuan/mt.
Warrant Daily: SHFE data showed that on March 19, the total registered volume of cast aluminum alloy warrants was 50,319 mt, down 1,109 mt from the previous trading day. By region, Shanghai totaled 4,055 mt, down 211 mt from the previous trading day; Guangdong 18,312 mt, down 119 mt; Jiangsu 6,043 mt, down 269 mt; Zhejiang 16,379 mt, down 510 mt; Chongqing 4,053 mt, up 0 mt; and Sichuan 1,477 mt, up 0 mt.
Aluminum scrap: Yesterday, spot primary aluminum edged down 20 yuan/mt from the previous trading day, while the aluminum scrap market held steady, with some regions making up the declines seen over the prior two days. In terms of the price difference between A00 aluminum and aluminum scrap, as of March 18, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,528 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,506 yuan/mt. Supply side, regulatory policies such as reverse invoicing are expected to remain difficult to materially ease in the short term next week, keeping compliance costs in the aluminum scrap recycling segment elevated and continuing to suppress raw material circulation efficiency. Demand side, expectations of aluminum prices remaining in the doldrums will slightly weigh on the purchasing sentiment of traders and downstream scrap utilization enterprises. In addition, the “March peak, April peak” season has underperformed, and the pace of end-user order release has lagged notably behind the seasonal pattern. Most downstream scrap utilization enterprises have mainly purchased as needed, lacking momentum for large-scale restocking. In the short term, close attention is still needed on the impact of geopolitical conflicts on fluctuations in primary aluminum prices, the actual recovery of end-user orders, and the actual implementation progress of supply-side policies, while remaining alert to the risk of wild swings in prices within the high range.
Silicon metal: (1) Price: Over the past two days, disrupted by macro factors and capital sentiment, silicon metal futures prices fell consecutively. Yesterday, the price low of the most-traded contract again dropped below 8,300 yuan/mt. Market sentiment was negative, silicon enterprise quotations showed limited fluctuation, the main force of market shipments shifted to trading firms engaging in both spot and futures market, and the transaction center moved lower than at the beginning of the week.（2) Social inventory: SMM statistics showed that as of March 19, social inventory of silicon metal in major regions totaled 553,000 mt, up 1,000 mt WoW. (Excluding Inner Mongolia, Ningxia, Gansu, and other regions).
Markets outside China: Overseas ADC12 quotes were around $3,400/mt, with spot import losses remaining at around 2,000 yuan, and the import window closed.
Summary: Price fluctuations intensified during the week, with strong wait-and-see sentiment in the market. Downstream buyers mostly chose to digest inventories or purchase as needed, with insufficient willingness to rush to buy amid continuous price rise, while restocking after price declines also remained cautious, resulting in overall limited demand release. In terms of supply, the operating rate of leading secondary aluminum enterprises rebounded 0.8 percentage points WoW to 59.5% this week, but due to persistently high aluminum prices and weak downstream purchase willingness, the rebound in enterprise operating rates was limited. ADC12 prices were expected to remain in the doldrums in the short term. Weak demand was unlikely to reverse in the short term, downstream acceptance of high prices remained limited, and weak aluminum price trends continued to weigh on market sentiment, leaving prices without upward momentum. However, supported by costs, downside room was limited, and attention should be paid to primary aluminum price trends and the pace of downstream demand release.
[Data source statement: Other than 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.]
