Limited demand growth and persistent cost constraints keep ADC12 prices in the doldrums [ADC12 Price Daily Review]

Futures: The most-traded AD2701 cast aluminum alloy futures contract opened at 22,250 yuan/mt today. After hitting the intraday low in early trading, it climbed and shot up to 22,450 yuan/mt before pulling back on resistance. It closed the morning session at 22,355 yuan/mt, down 325 yuan, or 1.43%, from yesterday's settlement price of 22,680 yuan/mt. Half-day trading volume was 3,830 lots, accounting for 35.6% of yesterday's full-day total of 10,750 lots. Open interest decreased by 287 lots to 17,687 lots, with the rebound on falling open interest pointing to short covering as the dominant driver and limited new long positions.

Spot: China's secondary aluminum alloy ADC12 spot price center moved lower today, with the SMM ADC12 quote down 100 yuan/mt. Weighed by the continued weakness in aluminum prices and futures, bearish sentiment in the market has increased somewhat. Meanwhile, end-use demand has been sluggish, and downstream purchases remain largely need-based, leaving the market without conditions for a pickup in trading volume. Against the backdrop of persistently weak prices, holders have faced growing pressure to sell, and their willingness to cut prices to facilitate deals has strengthened accordingly. However, aluminum scrap raw material prices remain relatively firm, limiting the downside for production costs and providing some support to ADC12 spot prices. In the short term, with consumption lacking growth drivers and futures yet to stabilize, ADC12 prices are likely to continue to consolidate on a subdued note. Going forward, attention should be paid to the pace of recovery in end-user orders, changes in aluminum scrap prices, and the transmission from futures to spot.