Contract Hits a New Stage High, Aluminum Alloy Market Consolidates at Highs, Drifting Higher [SMM Cast Aluminum Alloy Morning Comment]

8.6 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the aluminum alloy 2610 contract opened at 23,435 yuan/mt, shot up to 23,540 yuan/mt, refreshing a phase high, then pulled back to a low of 23,380 yuan/mt, and closed at 23,450 yuan/mt, up 20 yuan, or 0.09%, from the settlement price. Trading volume was 2,823 lots, down 2,941 lots from the previous period, indicating cooling short-term trading enthusiasm. Open interest increased by 146 lots to 17,172 lots, with minor net capital inflows, as the tug-of-war between longs and shorts continued. In the short term, prices are likely to continue consolidating at highs and drift higher.

Spot-Futures Price Spread Daily: According to SMM data, on August 5, the theoretical premium of SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy contract (AD2610) at 10:15 am was 810 yuan/mt.

Warrant Daily: SHFE data showed that on August 5, total registered warrants for cast aluminum alloy stood at 17,374 mt, down 59 mt from the previous trading day.

Aluminum Scrap: On Wednesday, SMM A00 spot aluminum price closed at 23,690 yuan/mt, edging down 40 yuan/mt from the previous trading day. Aluminum scrap prices generally held steady across regions. In terms of price spreads, on August 5, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was around 2,130 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was around 930 yuan/mt. Amid the off-season, aluminum scrap suppliers generally showed little willingness to sell at low prices, keeping aluminum scrap prices firm overall.

Silicon Metal: Yesterday, SMM oxygen-blown #553 silicon in east China traded near 9,000-9,100 yuan/mt, and #441 silicon near 9,200-9,300 yuan/mt. Affected by production cut news on the supply side and bullish sentiment from the PV anti-involution campaign, the most-traded silicon metal futures contract trended on the strong side. Silicon enterprises kept their offers largely stable and showed strong willingness to sell. Pay attention to the impact of variables on short-term price spikes, and watch resistance at silicon enterprises' selling interest.

Markets Outside China: Currently, overseas ADC12 offers range from $3,050 to $3,190/mt, with immediate import losses staying around 815 yuan/mt.

Summary: On Wednesday, ADC12 prices remained stable overall, as the industry had little willingness to adjust prices. Cost side, aluminum prices pulled back but to a limited extent, and enterprises lacked the willingness to follow the decline proactively; demand side, the market remained in the off-season, and spot prices were constrained by weak demand, leaving limited upside room. Recently, futures have been strong, tightening the spread between futures and spot prices. Since late July, the spot-futures price spread has gradually narrowed from high levels. As futures rise while spot prices are limited in following, the inquiry willingness of spot-futures traders has picked up somewhat. If futures strengthen further and the contango widens, it could reopen spot-futures arbitrage opportunities, prompting traders to purchase spot cargo. In the short term, the market will likely maintain a consolidative pattern with cost support and weak demand coexisting, and prices are expected to move sideways.

[Data Source Statement: Except for publicly available information, other data is processed by SMM based on public information, market communication, and SMM's internal database models. It is for reference only and does not constitute any decision-making advice.]