7.3 SMM Cast Aluminum Alloy Morning Comment
Futures: Overnight, the most-traded AD2609 contract closed at 23,100 yuan/mt, unchanged. Trading volume was 3,330, down 1,496 from the previous session. Prices shot up but trading volume contracted, with incremental capital failing to follow through during the upward push, and bulls showing weak willingness to rush to buy amid continuous price rise. Open interest was 9,972, down 1,013 lots from the previous session, with prices closing slightly unchanged and open interest pulling back in tandem, reflecting a consolidation pattern with reduced positions. Both bulls and bears took the initiative to reduce positions and exit, lifting wait-and-see sentiment in the market, with no sustained one-sided capital push in the near term.
Spot-Futures Price Spread Daily: According to SMM, on July 29, the SMM ADC12 spot price’s theoretical premium to the closing price of the most-traded AD2609 contract at 10:15 a.m. was 990 yuan/mt.
Warrant Daily: SHFE data shows that on July 29, total registered warrants for cast aluminum alloy stood at 17,341 mt, down 148 mt from the previous trading day. Of this, Shanghai registered 1,506 mt, down 29 mt; Guangdong registered 1,697 mt, down 0 mt; Jiangsu registered 3,806 mt, down 29 mt; Zhejiang registered 6,483 mt, down 60 mt; Chongqing registered 3,064 mt, down 30 mt; Sichuan registered 785 mt, down 0 mt.
Aluminum Scrap: Yesterday, SMM A00 spot aluminum closed at 23,400 yuan/mt, up 200 yuan/mt from the previous trading day. Aluminum scrap prices in various regions generally followed suit, rising 100-200 yuan/mt. In terms of price spreads between A00 aluminum and aluminum scrap, on July 29, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,030 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 710 yuan/mt, both remaining at historically ultra-low levels. This week, mainstream trading of shredded aluminum tense scrap (priced based on aluminum content) is expected to center around 19,800-20,500 yuan/mt. Currently, the price spread between A00 aluminum and aluminum scrap has narrowed to a historically low level, greatly eroding the cost advantage of aluminum scrap over primary aluminum. If primary aluminum prices continue to decline, the substitution effect of primary aluminum for aluminum scrap will accelerate. Close attention should be paid to the crowding-out effect of aluminum price trends on aluminum scrap demand.
Silicon Metal: On July 29, SMM non-oxygen blown #553 in east China was unchanged; oxygen-blown #553 was unchanged; #521 was unchanged; #441 was unchanged; #421 was unchanged; #421 for silicone was unchanged; #3303 was unchanged. Prices in Kunming, Huangpu Port, Tianjin, and Sichuan declined. Prices in Shanghai, Xinjiang, northwest China, and south China were unchanged.
Markets Outside China: On the import side, ADC12 offers outside China were at $3,050-$3,160/mt, and with domestic prices rising, the immediate import loss per ton narrowed again to 743 yuan.
Summary: Yesterday, the ADC12 market quotation overall raised by 100 yuan/mt. Driven by the simultaneous rise in aluminum prices and futures, aluminum scrap procurement costs have further increased, and the cost side has formed strong support for ADC12 prices. Most enterprises chose to raise quotations accordingly to pass on cost pressure. However, from market feedback, downstream demand remains in an off-season, and some enterprises adopt a wait-and-see attitude towards the actual transaction situation after the price adjustment. Overall, the current ADC12 price increase is mainly cost-driven, while demand-side support for the sustained rise in prices remains insufficient. In the short term, the market is expected to maintain an operating pattern where cost support and demand constraints coexist. Future price trends still require attention to aluminum price fluctuations and the follow-up of downstream orders.
[Data Source Statement: All data other than publicly available information are based on public information, market communication, and SMM's internal database model, processed by SMM, for reference only and do not constitute investment advice.]
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