Cast Aluminum Consolidates at Highs, ADC12 in Tug-of-War Between Longs and Shorts with Narrow Movements [SMM Cast Aluminum Alloy Morning Comment]

Aug 4 SMM Morning Comment on Cast Aluminum Alloy

Futures: The most-traded AD2610 futures contract opened at 23,270 yuan/mt overnight, consolidating and drifting higher during the night session. It dipped to a low of 23,245 yuan/mt and shot up to a high of 23,425 yuan/mt before closing at 23,365 yuan/mt. In early night trading, prices briefly hit bottom before steadily rising, reaching a stage high in the early morning hours and then pulling back slightly, overall staying high. Prices remained above short-term moving averages, and the medium-term bullish pattern was unchanged. Open interest on the night session edged up, indicating some capital inflow, but upward momentum faded after the spike, suggesting the short-term persistence of a high-level consolidation pattern.

Spot-Futures Price Spread Daily: According to SMM data, the theoretical premium of spot SMM ADC12 prices over the closing price of the most-traded AD2610 futures contract as of 10:15 on Aug 3 was .

Warrant Daily: SHFE data showed that total registered cast aluminum alloy warrants stood at 17,553 mt on Aug 3, down 118 mt from the previous trading day.

Aluminum Scrap: On Monday, SMM A00 spot aluminum closed at 23,500 yuan/mt, down 130 yuan/mt from the previous trading day, with aluminum scrap prices across regions generally following the decline. In terms of price spreads, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,050 yuan/mt on Aug 3, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 840 yuan/mt. Amid the off-season, scrap suppliers’ willingness to sell at low prices was generally weak, and aluminum scrap prices remained firm overall. On the supply side, the tightness in compliant invoiced cargoes persisted in the short term, with sellers’ reluctance to offer at low prices providing a floor for prices. On the demand side, the downstream order slump was unlikely to improve quickly, and scrap utilization enterprises would most likely continue purchasing as needed and keep inventories low, with procurement sentiment showing little sign of improvement.

Silicon Metal: On Aug 3, SMM oxygen-blown #553 silicon (east China) quotes were flat at 9,000-9,100 yuan/mt; non-oxygen blown #553 silicon (east China) quotes were flat at 8,900-9,100 yuan/mt; #441 silicon (east China) quotes were flat at 9,200-9,300 yuan/mt.

Markets Outside China: Overseas ADC12 offers remained at $3,050-3,160/mt. Due to lower domestic prices, real-time import losses widened slightly to about 700 yuan/mt.

Summary: On Monday, ADC12 market quotes consolidated on a subdued note, with SMM ADC12 down 100 yuan/mt. The cost side still provided some support, but the pullback in futures and primary aluminum prices weighed on market sentiment. Meanwhile, end-use demand was mediocre, with insufficient orders and weak transaction support, prompting enterprises to adjust prices mainly in line with the market, with limited willingness to hold prices firm. In the short term, ADC12 prices still face some downward pressure, but cost support remains, so prices are expected to move sideways.

[Data source statement: All data other than publicly available information are processed by SMM based on public information, market communication, and SMM’s internal database models, and are for reference only; they do not constitute a decision-making recommendation.]