Cast Aluminum Pulls Back Slightly, Short-Term Maintains Fluctuating Consolidation Battle [SMM Cast Aluminum Alloy Morning Comment]

7.13 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the most-traded aluminum alloy 2609 contract closed at 22,830, down 135 from the previous period, a decline of 0.59%. Trading volume was 3,301, up 71 MoM, and open interest was 19,216, up 129 MoM. The current WR indicator at -38.96 is in the mid-range and has not entered an extreme overbought/oversold zone; there is no particularly strong short-term reversal signal, and consolidation-driven trading is prominent. Open interest rose in tandem; bullish-bearish divergence has widened, with funds continuing to enter for positioning, and short-term volatility is likely to remain elevated.

Spot-Futures Price Spread Daily: According to SMM data, on July 10, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the cast aluminum alloy most-traded contract (AD2609) was 1,020 yuan/mt.

Warrant Daily: SHFE data showed that on July 10, the total registered volume of cast aluminum alloy warrants was 22,212 mt, down 273 mt from the previous trading day. Among them, the total registered volume in Shanghai was 2,157 mt, down 0 mt; Guangdong was 3,114 mt, down 273 mt; Jiangsu was 4,407 mt, down 0 mt; Zhejiang was 7,451 mt, down 0 mt; Chongqing was 4,298 mt, down 0 mt; and Sichuan was 785 mt, down 0 mt.

Aluminum scrap: Last Friday, SMM A00 spot aluminum prices closed at 23,120 yuan/mt, up 170 yuan/mt from the previous trading day. The aluminum scrap market generally followed the rise, while some grades in certain regions stabilized and market participants stayed on the sidelines. In terms of the price difference between A00 aluminum and aluminum scrap, on July 10, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,061 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 747 yuan/mt. Both slightly stabilized from the previous record lows but remained at extremely low levels; tighter enforcement of reverse invoicing policies provided support, and the “easy to rise, hard to fall” logic for aluminum scrap remained intact. Notably, under the combined impact of a rapid decline in aluminum prices and tight availability of invoices, the price difference between A00 aluminum and aluminum tense scrap narrowed sharply, and some cast aluminum alloy enterprises have begun using A00 aluminum ingot to replace aluminum scrap as raw material for production. The aluminum scrap market is expected to continue to consolidate on a subdued note, but downside room for prices is limited. The mainstream range for shredded aluminum tense scrap priced based on aluminum content is expected to run at 19,200—19,800 yuan/mt (tax excluded). The price difference between A00 aluminum and aluminum scrap has narrowed to historical lows, significantly weakening aluminum scrap’s economic advantage versus primary aluminum; if aluminum prices continue to fall, the substitution effect will accelerate.

Silicon metal: On July 10, SMM east China non-oxygen blown #553 prices were stable; oxygen-blown #553 prices were raised by 50 yuan/mt; 521# prices were stable; 441# prices were raised by 50 yuan/mt; 421# prices were stable; 421# silicone-grade prices were stable; and 3303# prices were stable. Some silicon prices in Kunming, the Northwest region, and Sichuan were lowered. Some silicon prices in Tianjin were raised. Silicon prices in Huangpu Port, South China, Shanghai, and Xinjiang remained stable.

Markets outside China: On the import side, overseas ADC12 quotes were at $3,100–3,200/mt, and the price spread between Chinese and overseas markets continued to recover. If overseas quotes continue their pullback, the import profit window is expected to gradually open, at which point increased import resources will supplement domestic supply to some extent.

Summary: Last Friday, overall quotes in the ADC12 market were mainly stable and wait-and-see, with only a few enterprises tentatively raising prices by 100 yuan/mt. This was mainly driven by the strengthening of aluminum prices and futures, aiming for a tentative price adjustment following the cost-side increase. However, from market feedback, most enterprises still chose to remain stable and wait, generally believing that the demand side remains weak. The characteristics of the traditional off-season in July became more apparent, as downstream orders continued to decrease and market transactions were hard to improve significantly. Against the backdrop of limited demand support, although the cost side provided some bottom support to prices, the upward momentum for spot prices remained insufficient, and enterprises’ overall attitude toward price adjustments was relatively cautious. In the short term, the ADC12 spot market is expected to continue moving sideways, with the price center supported by costs and hard to decline significantly. But before end-use demand sees substantial improvement, the upside room for spot prices is expected to remain somewhat constrained.

[Data Source Statement: Except for public information, other data are processed by SMM based on public information, market communication, and internal SMM database models, for reference only. It does not constitute a decision-making suggestion.]