10.8 SMM cast aluminum alloy morning comment
Futures: From October 1 to 7, China was on the National Day holiday, with the SHFE closed and trading suspended.
Spot-futures price spread daily: According to SMM data, on September 30, the theoretical premium of the SMM ADC12 spot price over the closing price of the most-traded cast aluminum alloy contract (AD2611) at 10:15 was 900 yuan/mt.
Aluminum scrap: On September 30, the SMM A00 aluminum price closed at 24,030 yuan/mt, down 80 yuan/mt from the previous trading day, while the aluminum scrap market fell by 0-100 yuan/mt. On the import side, prices of imported shredded zorba at Ningbo Port and Tianjin Port were recorded at 21,470 yuan/mt and 21,520 yuan/mt respectively (tax inclusive). During the week, most large downstream secondary aluminum enterprises did not halt production over the National Day holiday, and pre-holiday stockpiling was completed at a normal pace. After the National Day holiday, the aluminum scrap market continued to hold up well. Supply side, aluminum scrap yards will gradually resume operations after a brief 3-5 day holiday, and material release is expected to increase somewhat. However, recycling policies still constrain circulation, the tight invoice supply situation is unlikely to ease in the short term, and tight supply will continue to support prices. Demand side, as the traditional peak consumption season for cast aluminum alloy gradually kicks in, enterprises are accelerating order-taking and procurement, and the price support strength of aluminum tense scrap under the dual-tight supply-demand situation is expected to move to a higher level. Demand for wrought aluminum alloy is moderate, with relatively ample in-factory inventory, but under tax audit restrictions, aluminum scrap supply is expected to decline, and the price uptrend channel will also gradually open up. That said, for now, peak-season demand release remains relatively mild, and actual post-holiday order fulfillment still needs close tracking.
Silicon metal: As of September 30, SMM oxygen-blown #553 silicon in east China was at 9,400-9,500 yuan/mt, and #441 silicon was at 9,500-9,600 yuan/mt. Currently, silicon metal's own fundamentals still maintain a tight supply pattern, and with cost support from silicon coal, electrodes, and freight, silicon metal prices are firmly supported. Market views on the post-holiday period are divided. If major northern producers do not have significant expectations for production increase in Q4, silicon metal is likely to see continuous destocking in Q4. After the holiday, attention should be paid to operating rates on both the supply and demand sides and capital momentum in futures.
Markets outside China: On the import side, overseas ADC12 offers remained in the range of $3,100-3,200/mt, with import profit margin near breakeven. Attention should be paid to the replenishment of imported supply going forward.
Summary: After the holiday, secondary aluminum enterprises will resume production one after another, and the supply side will gradually recover. However, against the backdrop of tightening tax invoice policies, the difficulty of procuring compliant aluminum scrap may still constrain production release. The demand side is the key factor determining post-holiday price elasticity. If end-use orders improve and post-holiday restocking demand is released, marginal supply-demand improvement is expected to support prices. Conversely, if demand recovery falls short of expectations, upward momentum in spot prices will remain limited. Overall, post-holiday ADC12 prices are expected to maintain a certain degree of resilience under cost support, consolidating on a strong note in the short term. Subsequent price elasticity will depend more on changes in tax invoice policies, raw material costs, and actual end-use demand.
[Data source statement: Except for publicly available information, all other data 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.]
