8.31 SMM Cast Aluminum Alloy Morning Comment
Futures: In the night session last Friday, the aluminum alloy 2610 contract opened at 23,215 yuan/mt. After dipping to support at 23,170 yuan/mt, bulls stepped in to push prices higher. The contract shot up to 23,400 yuan/mt during the session and closed at 23,340 yuan/mt, up 0.54%. During the session, prices overall held above the average price line and pared some gains after the spike. Night session trading volume expanded, open interest fell in tandem, and bulls took short-term profits and exited. On the 4-hour chart, a bullish candlestick with a real body formed, prices stood above short-term moving averages, and technical indicators continued to repair. Resistance lies at 23,400 yuan/mt, while support is at 23,150 yuan/mt. In the short term, prices are likely to rebound from lows and consolidate on a strong note.
Spot-Futures Price Spread Daily: According to SMM data, on August 28, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the most-traded cast aluminum alloy contract (AD2610) was 790 yuan/mt.
Warrant Daily: SHFE data showed that on August 28, total registered cast aluminum alloy warrants were 21,618 mt, down 30 mt from the previous trading day.
Industry Developments: The secondary aluminum industry PMI in August recorded 46.7%, up 9.0 percentage points MoM. Industry sentiment recovered from the July low, but overall remained in contraction territory. As orders from major downstream sectors such as automobiles and motorcycles recover seasonally, industry production and order-taking pace are expected to improve accordingly. The secondary aluminum industry PMI in September is expected to continue recovering and return above the 50 mark. Going forward, close attention should be paid to the pace of peak-season order fulfillment, compliant aluminum scrap supply, and changes in tax invoice policies.
Aluminum Scrap: Last Friday, SMM A00 spot aluminum prices closed at 23,900 yuan/mt, down 20 yuan/mt from the previous trading day, while aluminum scrap prices in China were broadly stable overall. In terms of price spreads, on August 28, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,354 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,133 yuan/mt, broadly stable WoW. Imported zorba prices at Ningbo port were lowered from 21,670 yuan/mt to 21,370 yuan/mt (tax inclusive), while at Tianjin port they fell from 21,720 yuan/mt to 21,420 yuan/mt (tax inclusive). Recently, the import window has improved from earlier, traders have become more active in inquiries and procurement, and import supply has increased. In the short term, the market is at the tail end of the traditional off-season, and orders at downstream scrap utilization enterprises have yet to show a clear recovery. The pre-peak-season pull-forward effect has not been notable. Scrap utilization enterprises have continued to purchase as needed and keep low inventories, with limited acceptance of higher prices. Some enterprises have chosen to stay on the sidelines for now after following earlier price increases.
Silicon Metal: Silicon metal prices have been slightly firmer in a narrow range recently. As of August 28, SMM east China oxygen-blown #553 silicon was at 9,300-9,500 yuan/mt (up 50 yuan/mt WoW), #441 silicon at 9,500-9,600 yuan/mt (up 50 yuan/mt WoW), and #3303 silicon at 10,100-10,200 yuan/mt (flat WoW). Overall, supply and demand in the market have been relatively balanced recently. The market is waiting for month-end production cuts by large plants to be confirmed. Some suppliers maintained a strong wait-and-see stance, and silicon metal prices moved sideways.
Markets Outside China: Overseas ADC12 offers were stable at $3,050-3,180/mt. Import losses remained around 900 yuan/mt, and the import window stayed closed, making it difficult for overseas cargoes to effectively supplement domestic supply for now.
Summary: Last Friday, the ADC12 market remained broadly stable, with SMM ADC12 prices holding at 23,950 yuan/mt. Both the cost side and the demand side lacked notable changes. Aluminum prices and aluminum scrap raw material prices fluctuated only modestly, and their support and boost to ADC12 prices remained relatively stable. The demand side remained at the tail of the off-season, with downstream procurement pace slow overall, and the market had not yet formed a clear restocking driver. With supply, demand, and costs lacking notable changes, the industry's overall willingness to adjust prices was weak, and market wait-and-see sentiment remained strong. In the short term, ADC12 prices are expected to continue moving sideways in a narrow range. Going forward, as the traditional peak season approaches, attention should focus on improvements in downstream orders and procurement demand.
[Data Source Statement: All data other than public information are processed by SMM based on public information, market communication, and SMM's internal database models, and are for reference only and do not constitute decision-making advice.]
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