[SMM Analysis] June ADC12 Price Poised to Rise as Supply Crunch Offsets Off-season Pressure

Futures market: In May, the most-traded cast aluminum alloy contract swung wildly with its price center moving lower. It traded in the range of 22,800-23,800 yuan/mt throughout the month, repeatedly retreated after rapid rises and bottomed out, failing to form a one-sided trend. Moving averages gradually converged, and the contract remained range-bound overall.

Spot market: At the start of the month, dragged by the Labour Day holiday and the off-season, ADC12 prices came under pressure and fell. In the middle and latter parts of the month, persistently tightening policies reinforced expectations for raw material shortages and production cuts, strengthening support at lower levels. Spot prices moved sideways around 23,700 yuan/mt. The price center shifted higher in June. As of June 5, SMM ADC12 was quoted at 23,900 yuan/mt, up 100 yuan/mt from the beginning of May. 

Cost side, according to the latest SMM data, the total theoretical cost of the ADC12 industry from January to May 2026 increased by 14.0 percentage points from 2025 to 23,305 yuan/mt. By component, aluminum scrap cost was approximately 21,070 yuan/mt, accounting for 90.4%; copper cost was 836 yuan/mt, 3.6%; and silicon cost was 475 yuan/mt, 2.1%. The cost shares of aluminum scrap and copper continued to rise, while silicon cost continued its pullback. Since May, the raw material side overall remained tight, serving as the core factor supporting the market. Although aluminum scrap prices fluctuated with aluminum prices, the actual decline was limited by suppliers holding back from selling. Ex-China aluminum scrap prices stayed high, keeping the import window shut for an extended period and significantly weakening its supplementary role to the Chinese market. At the same time, regulation of the 'invoice-based economy' continued to tighten, making it increasingly difficult to obtain input invoices. Enterprises' tax burdens and compliance costs were passively pushed up, causing the industry's theoretical profit to invert. The tight supply of invoices and stricter compliance oversight are unlikely to ease in the short term. Procurement costs for aluminum scrap and tax burdens are expected to remain high in June. 

Demand side, in May, the market continued to exhibit off-season characteristics. Orders from downstream die-casting enterprises remained sluggish, procurement was mainly based on rigid demand and small batches, and the willingness to rush to buy amid rising prices was insufficient, keeping market trading activity low throughout. End-use consumption saw little substantial improvement, with the demand side continuously suppressing the upside room for prices.

Supply side, in May, the operating rate of the secondary aluminum alloy industry was 46.6%, down 5.4 percentage points MoM and down 4.0 percentage points YoY. Enterprise production generally shrank, mainly due to two bearish factors. First, the Labour Day holiday combined with weakening end-use demand led to shrinking orders. Second, tighter regulation on "reverse invoicing" raised the compliance cost of aluminum scrap recycling, making supplies with invoices tight, and enterprises faced the dilemma of "invoice shortages" and losses. The operating rate in June is expected to continue its downtrend, mainly constrained by weakening demand in the off-season and elevated policy compliance costs. 

Entering June, secondary aluminum alloy prices will remain generally stable with slight rise. On the cost side, tight invoice supply and stricter compliance supervision are unlikely to ease significantly in the short term, and enterprise tax burden costs are expected to stay high. On the supply side, if the shortage of invoices and tight raw material supply continue to intensify, the scope of production cuts in the industry will further expand. Coupled with the continued closure of the import window, the tight spot supply pattern is expected to persist, providing strong support for prices. On the demand side, the off-season pattern continues, with downstream dominated by just-in-time procurement, leaving insufficient upward momentum. However, supply tightening offsets the off-season pressure, limiting the downside room for prices. Overall, the price center of ADC12 in June is expected to rise compared with May, showing a generally stable with slight rise and range-bound trend. Going forward, close attention should be paid to changes in compliant raw material supply, the implementation of production cuts in the industry, and the pace of end-use demand recovery.