Aluminum Alloy Futures Retreat After Rapid Rise to Close Lower, Spot Cargo Cost Support Keeps Prices Firm [SMM Cast Aluminum Alloy Morning Comment]

6.4 SMM Cast Aluminum Alloy Morning Comment

Futures: The most-traded aluminum alloy 2608 contract closed at 23,105 yuan/mt overnight, down 160 yuan/mt from the previous trading day, a decline of 0.69%. It retreated after a rapid rise, closing with a bearish candlestick. The previous high of 23,550 was clearly under pressure, ending the short-term rebound. Trading volume was 2,830 lots, down 4,073 lots from the previous value. Volume shrank during the decline, indicating bears' selling pressure slowed down while bulls' buying was also weak. Open interest was 13,704 lots, up 28 lots slightly. The slight increase in open interest amid the decline suggested funds marginally added short positions in line with the trend, with bull-bear divergence slightly widening.

Spot-futures price spread daily report: According to SMM data, on June 3, the SMM ADC12 spot price was at a theoretical premium of 660 yuan/mt to the most-traded cast aluminum alloy contract (AD2608) closing price at 10:15 AM.

Warrant daily report: SHFE data showed that on June 3, total registered warrants for cast aluminum alloy were 39,830 mt, an increase of 29 mt from the previous trading day. Among them, Shanghai had a total registered volume of 2,897 mt (unchanged from the previous trading day); Guangdong had 10,042 mt (unchanged); Jiangsu had 7,681 mt (unchanged); Zhejiang had 12,328 mt (down 151 mt); Chongqing had 5,887 mt (up 180 mt); Sichuan had 995 mt (unchanged).

Silicon metal: On June 3, SMM east China non-oxygen blown #553 was stable from the previous day; oxygen-blown #553 was stable; #521 was stable; #441 was stable; #421 was stable; #421 for silicone use was stable; #3303 was stable. Silicon prices in Huangpu Port, Tianjin, Kunming, Northwest, Sichuan, Shanghai, and Xinjiang regions remained stable.

Aluminum scrap: Yesterday, SMM A00 price rose 130 yuan/mt from the previous trading day, and the aluminum scrap market generally followed the uptrend. The aluminum scrap market is expected to continue to hold up well at highs this week, with shredded aluminum tense scrap (priced based on aluminum content) mainstream range maintained at 20,300-20,900 yuan/mt (tax exclusive). The "reverse invoicing" policy constraint persists, and the tight supply of compliant invoiced materials is difficult to reverse in the short term. The lagged contraction effect of imported aluminum scrap has not been fully released, and subsequent port arrivals will continue to run at low levels. However, as the off-season approaches, the sustainability of subsequent orders for scrap utilization enterprises is concerning, and end-use demand growth is limited. Continued attention is needed on policy compliance progress, the US-Iran war and peace negotiation results, and imported material port arrival conditions.

Markets outside China: On the import side, overseas ADC12 quotes fluctuated at highs at $3,360-3,460/mt. Thanks to strengthening domestic prices, the price spread between domestic and overseas markets inversion has eased somewhat. The current theoretical immediate loss narrowed to around 3,100 yuan/mt, but the loss remains deep, and the theoretical import window remains closed.

Summary: Yesterday, ADC12 prices overall continued their upward trend, with most enterprises raising prices by 100-200 yuan/mt. Among the drivers, increased tax burden pressure, persistent tight raw material supply of compliant materials, and continuously rising costs remained the core factors pushing prices higher. Additionally, the widening price spread between China and non-China markets further reinforced bullish market expectations. Under the dual effects of cost support and supply constraints, enterprises generally had a strong willingness to hold prices firm, actively following the uptrend in quotes. In the short term, if tight raw material supply does not show significant easing, ADC12 prices still have the potential to continue probing higher, with the market overall maintaining a pattern of holding up well.

[Data source statement: Data other than public 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.]