Cast Aluminum Alloy Supply-Demand Dual Weakness Pattern Continues, Short-Term Move Sideways [SMM Cast Aluminum Alloy Morning Comment]

5.26 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded aluminum alloy 2607 contract opened at 23,120 yuan/mt during the night session, reaching a high of 23,120 yuan/mt and a low of 22,880 yuan/mt, closing at 23,020 yuan/mt, down 75 yuan from the previous settlement price, a decline of 0.32%. After the night session opened, prices quickly dipped lower, found support at low levels and gradually stabilized and rebounded, with a slight uptick toward the end of the session. Trading volume was 2,303 lots, open interest stood at 14,904 lots, down 187 lots, as funds modestly exited the market, and overall futures fluctuations were mild.

Spot-futures price spread daily report: According to SMM data, on May 25, the SMM ADC12 spot price was at a theoretical premium of 555 yuan/mt over the closing price of the most-traded cast aluminum alloy contract (AD2607) at 10:15 AM.

Warrant daily report: SHFE data showed that on May 25, total registered warrants for cast aluminum alloy were 39,454 mt, an increase of 323 mt from the previous trading day. By region, Shanghai had 2,720 mt (up 205 mt), Guangdong had 10,646 mt (down 151 mt), Jiangsu had 7,532 mt (unchanged), Zhejiang had 12,153 mt (unchanged), Chongqing had 5,408 mt (up 269 mt), and Sichuan had 995 mt (unchanged).

Aluminum scrap: SMM A00 prices continued to edge down yesterday, falling 40 yuan/mt from the previous trading day. The aluminum scrap market remained largely stable overall, with some regional varieties adjusting lower to catch up with recent declines. Price difference between A00 aluminum and aluminum scrap: on May 25, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 2,586 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 2,210 yuan/mt. Aluminum scrap prices were expected to continue holding up well at elevated levels this week, with shredded aluminum tense scrap (priced based on aluminum content) maintaining a mainstream range of 20,500-21,100 yuan/mt (tax-exclusive). Regulatory enforcement on "reverse invoicing" continued on the policy front, and the tight supply of compliant sources was unlikely to reverse in the short term. The lagging effect of imported aluminum scrap continued to emerge, with actual port arrivals contracting and expected to further exacerbate tight supply. Geopolitical risks provided floor support for aluminum prices, which in turn pushed up aluminum scrap prices. However, the peak season effect was fully winding down, and end-user orders weakened. Wrought aluminum alloy scrap raw material inventory in Henan and other regions remained relatively high, suppressing procurement demand, and the secondary aluminum market was expected to continue its pattern of weak supply and demand.

Silicon metal: On May 25, SMM east China non-oxygen blown #553 prices held steady; oxygen-blown #553 prices held steady; #521 prices held steady; #441 prices held steady; #421 prices held steady; #421 for silicone use prices held steady; #3303 prices held steady. Silicon prices in Huangpu Port, Tianjin, Kunming, northwest China, Sichuan, Shanghai, and Xinjiang remained stable.

Markets outside China: Imported ADC12 was currently quoted at a high range of $3,380-3,420/mt, with an immediate import loss of approximately 3,287 yuan/mt, and the theoretical import window remained closed.

Summary: On Monday, the ADC12 market overall continued a wait-and-see pattern with stable prices, with SMM ADC12 prices holding steady from the previous day at 23,700 yuan/mt. The core market contradiction remained centered on the tension between "weak demand" and "high costs": on one hand, downstream consumption recovery was limited and order performance was weak, putting pressure on prices; on the other hand, the persistent invoice shortage issue for aluminum scrap and tight compliant raw material supply made it difficult for enterprises to replenish raw materials, and cost support remained strong. Under the two-way tug-of-war between supply and demand, ADC12 prices were expected to continue to move sideways in the short term, with overall market sentiment remaining cautious.

[Data source disclaimer: Data other than publicly available information is derived from public information, market communication, and SMM's internal database models, processed by SMM for reference only and does not constitute decision-making advice.]