Overnight Cast Aluminum Alloy Sees Sharp Pullback; Aluminum Scrap Supply Contraction Supports Spot Prices [SMM Cast Aluminum Alloy Morning Comment]

6.24 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the aluminum alloy 2608 contract opened at 23,180 yuan/mt. It rallied to an round high of 23,655 yuan/mt before bull momentum faded quickly, and prices weakened unilaterally throughout the session, fluctuating downward. The low was 23,045 yuan/mt, and the close was 23,095 yuan/mt, down 250 yuan/mt or 1.07% from the previous settlement price. The intraday chart showed it was under pressure all day, trading below the average price line. The short-term RSI indicator retreated from highs, and the 4-hour chart formed a long bearish candle that broke below the short-term moving average. Trading volume was 3,500, shrinking from the previous period, while open interest decreased slightly by 122 lots.

Spot-Futures Price Spread Daily: According to SMM data, on June 23, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2608) was 820 yuan/mt.

Warrant Daily: SHFE data showed that on June 23, total registered warrants for cast aluminum alloy stood at 33,696 mt, up 151 mt from the previous trading day. By region: Shanghai, 3,558 mt, up 602 mt; Guangdong, 5,441 mt, down 60 mt; Jiangsu, 7,686 mt, unchanged; Zhejiang, 10,820 mt, down 361 mt; Chongqing, 5,346 mt, down 30 mt; and Sichuan, 845 mt, unchanged.

Aluminum Scrap: On Tuesday, the SMM A00 price edged down 70 yuan/mt from the previous trading day to 23,870 yuan/mt, and the aluminum scrap market followed slightly lower, with some regions holding stable on a wait-and-see stance. The aluminum scrap market is expected to continue fluctuating weakly at elevated levels. Tight supply of sources with compliant invoices persisted, and expanding production cuts and shutdowns heightened expectations of tightening aluminum scrap supply, which provided bottom support for prices. On the demand side, downstream orders for secondary cast aluminum alloy remained sluggish, purchasing support from wrought aluminum alloy weakened, and end-use consumption showed little material improvement. The supply-demand weakness in the aluminum scrap market is unlikely to reverse in the near term.

Inventory: According to SMM statistics, on June 24, daily inventory of secondary aluminum alloy ingots in major domestic consuming regions stood at 22,200 mt, down 356 mt from Tuesday, maintaining the destocking pace.

Silicon Metal: (1) Price: Yesterday, SMM oxygen-blown #553 silicon in east China was at 9,100-9,200 yuan/mt, and #441 silicon was at 9,300-9,400 yuan/mt. The most-traded contract on the futures market fluctuated around 8,500 yuan/mt. Silicon metal prices continued to move sideways in a narrow range, and with no new market-moving news, the price gains and losses were stalemated. (2) Production: During the rainy season, some silicon enterprises in Yunnan and Sichuan gradually resumed production, while the operating rate of northern silicon enterprises was largely stable. The production resumptions in the southwest drove up the operating rate of the silicon metal industry, and the supply of silicon metal continued to increase.

Markets outside China: The current import ADC12 price has slightly pulled back to $3,300–$3,370/mt, with the instant import loss per tonne narrowing to around 2,434 mt. The price inversion has eased somewhat, but the theoretical import window remains closed.

Summary: On Tuesday, the ADC12 market maintained a stable trend overall. SMM ADC12 was flat from the previous trading day at 24,100 yuan/mt. Prices of aluminum scrap raw materials were generally stable, and no significant changes occurred on the cost side. On the demand side, downstream procurement maintained a just-in-time pace, and market transactions were mediocre. In the absence of new bullish or bearish factors, enterprises generally adopted a wait-and-see strategy, focusing on stabilizing prices for shipments. ADC12 prices are expected to continue to move sideways in the short term. The market will continue to monitor aluminum price trends, changes in aluminum scrap costs, and downstream order conditions.

[Data source statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and SMM's internal database models. They are for reference only and do not constitute decision-making advice.]