Post-Holiday Demand Weak, Short-Term Prices Expected to Move Sideways [SMM Cast Aluminum Alloy Morning Comment]

5.7 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded aluminum alloy contract AD2606 closed at 22,985 yuan/mt overnight, down 260 yuan, a decline of 1.12%. It is currently in a clear downtrend, with all moving averages aligned downward, forming bearish suppression. The current WR value is -88.52, having entered the oversold zone. Short-term downward momentum has been released relatively fully, and there is a possibility of a technical rebound. However, in a bearish trend, oversold signals often only represent a slowdown in decline rather than a trend reversal.

Spot-futures price spread daily report: According to SMM data, on May 6, the SMM ADC12 spot price was at a theoretical premium of 575 yuan/mt to the most-traded cast aluminum alloy contract (AD2606) closing price at 10:15.

Warrant daily report: SHFE data showed that on May 6, total registered warrants for cast aluminum alloy were 33,824 mt, an increase of 505 mt from the previous trading day. By region, Shanghai had a total of 1,999 mt registered, up 177 mt from the previous trading day; Guangdong had a total of 10,700 mt registered, down 120 mt from the previous trading day; Jiangsu had a total of 5,999 mt registered, up 477 mt from the previous trading day; Zhejiang had a total of 9,687 mt registered, up 181 mt from the previous trading day; Chongqing had a total of 4,143 mt registered, unchanged from the previous trading day; Sichuan had a total of 1,296 mt registered, down 210 mt from the previous trading day.

Aluminum scrap: Spot primary aluminum rose 140 yuan/mt from the previous trading day yesterday. Aluminum scrap market prices adjusted unevenly, with clients in some regions choosing to wait and see without adjusting their quotes. Affected by the Labour Day holiday, most aluminum scrap yards arranged 1-2 days off. As of that day, the aluminum scrap purchase pace remained stable YoY compared to April overall. In the first week after the Labour Day holiday, China's aluminum scrap market is expected to continue in the doldrums at high levels, with shredded aluminum tense scrap (priced based on aluminum content) mainstream range expected to remain around 20,700-21,300 yuan/mt (tax-exclusive). Supply-side policy constraints continued, and imported aluminum scrap volumes are expected to decline, weakening supply replenishment. However, as the peak season effect winds down, demand for aluminum tense scrap remained persistently weak, with limited expectations for incremental end-user orders. In the short term, attention should be paid to the progress of US-Iran negotiations, the implementation of invoice and reverse invoicing policies, and the recovery of post-holiday orders at scrap utilization enterprises.

Silicon metal: On May 6, SMM east China non-oxygen blown #553 prices remained stable; oxygen-blown #553 prices remained stable; #521 prices remained stable; #441 prices remained stable; #421 prices remained stable; #421 silicone-grade prices remained stable; #3303 prices remained stable. Silicon prices were raised at individual suppliers in Tianjin. Silicon prices in Huangpu Port, Northwest China, Xinjiang, Sichuan, Kunming, and Shanghai remained partially stable.

Markets outside China: On the import front, ex-China ADC12 quotes remained at a high level around $3,400/mt, with per-mt instant import losses expanding to over 3,000 yuan, and the theoretical import window remained closed.

Summary: ADC12 market price adjustments diverged yesterday. Some enterprises attempted slight price increases driven by the futures recovery, but overall upward momentum was insufficient, with most enterprises maintaining stable prices and waiting. Meanwhile, individual enterprises chose to lower prices due to weak post-holiday demand and previous high-quote pressure. The post-holiday market remained in a phase of interplay between weak demand and cost support, with limited improvement in transactions. ADC12 prices are expected to move sideways in the short term, with insufficient upward momentum.

[Data source statement: Data other than public information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.]