May auto market: domestic demand under pressure, exports impressive; price difference between A00 aluminum and aluminum scrap narrows, raw materials in tight supply [SMM Cast Aluminum Alloy Morning Comment]

6.11 SMM Cast Aluminum Alloy Morning Comment

Futures: Overnight, the aluminum alloy 2608 contract opened higher, then retreated after rapid rise, reaching a high of 23,465 yuan/mt and a low of 23,005 yuan/mt, closing at the settlement price of 23,251 yuan/mt. The minutely chart showed that after the night session opened, prices quickly surged to around 23,465, then fluctuated downward, with a slight rebound near the close. The RSI indicator was already in overbought territory. Trading volume declined from the previous period, while open interest edged up by 121 lots. Overall, after the rapid rise met resistance and pulled back, stabilizing near the close, the contract fluctuated upward. In the near term, attention should be paid to the effectiveness of support at 23,200 yuan/mt.

Spot-Futures Price Spread Daily: According to SMM data, on June 10, the SMM ADC12 spot price had a theoretical premium of 880 over the closing price at 10:15 of the most-traded cast aluminum alloy contract (AD2607).

Warrant Daily: SHFE data showed that on June 10, total registered warrants for cast aluminum alloy stood at 39,224 mt, up 358 mt from the previous trading day. Among them, Shanghai registered 2,897 mt, up 0 mt; Guangdong registered 8,648 mt, down 153 mt; Jiangsu registered 8,041 mt, up 481 mt; Zhejiang registered 12,754 mt, up 88 mt; Chongqing registered 5,889 mt, down 58 mt; Sichuan registered 995 mt, up 0 mt.

Industry Dynamics: According to CAAM data, in May, automobile production and sales reached 2.616 million units and 2.629 million units, up 1.6% and 4.1% MoM respectively, but down 1.2% and 2.1% YoY respectively. From January to May, automobile production and sales reached 12.235 million and 12.207 million units, down 4.6% and 4.2% YoY respectively. According to CAAM analysis, in May, automobile production and sales increased MoM but edged down slightly YoY. Affected by multiple factors such as policy adjustments, changes in market structure, and the macro environment under pressure, the domestic market continued to post a double-digit decline YoY; exports remained robust, maintaining rapid growth.

Aluminum Scrap: Yesterday, SMM A00 price continued to fall 120 yuan/mt from the previous trading day to 23,900 yuan/mt, and the aluminum scrap market edged down slightly in tandem. On the price spread front, on June 10, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 2,458 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap had fallen below 2,000 yuan/mt to 1,920 yuan/mt. Aluminum scrap market prices are expected to continue to hold up well at high levels amid fluctuations. As the off-season deepens, the sustainability of orders for downstream scrap utilization enterprises is a concern. These enterprises are maintaining a strategy of purchasing as needed and low inventory. Procurement sentiment is unlikely to improve significantly, and billing risks in the industry remain high. Meanwhile, expectations of supply-side contraction are strengthening. Overall, the market is characterized by weakness on both supply and demand sides.

Silicon Metal: On June 10, SMM east China non-oxygen blown #553 remained flat from the previous day at 9,150 yuan/mt; oxygen-blown #553 also held steady from the previous day at 9,150; 521# was flat from the previous day; 441# was flat from the previous day; 421# was flat from the previous day; 421# for silicone was flat from the previous day; 3303# was flat from the previous day. In Tianjin, some silicon prices edged up slightly. Silicon prices in Huangpu Port, Kunming, northwest China, Sichuan, Shanghai, and Xinjiang remained stable.

Markets Outside China: Currently, quotes for imported ADC12 have pulled back slightly to $3,350–$3,430/mt, and immediate import losses per ton have narrowed to within 3,000 yuan, but the theoretical import window remained closed.

Summary: On Wednesday, the ADC12 market traded steadily. SMM ADC12 price remained unchanged at 23,900 yuan/mt. This week, cast aluminum alloy futures diverged from SHFE aluminum, with cast aluminum futures holding steady and strengthening, while SHFE aluminum fell below the 24,000 yuan/mt level. In the spot market, A00 aluminum prices declined for several days, while ADC12 prices remained firm. The price spread between the two has returned to positive territory, ending the inversion since April and highlighting the resilience of alloy prices. Cost support remained strong: aluminum scrap prices only dropped modestly in line with A00, and tight supply of compliant raw materials further solidified the price floor. On the demand side, weakness persisted, with the off-season deepening and output cuts at end-users like OEMs leading to a pullback in orders. Overall, under the combined effect of cost support and demand constraints, significant upward momentum was lacking, but downside room was also limited. As the ADC12-A00 price spread further recovered, there is a possibility of a slight upward probe in prices. It is recommended to continue monitoring aluminum scrap market dynamics and the pace of recovery in automotive end-use demand.

[Data Source Disclaimer: Other than publicly available information, all other data are processed by SMM based on public information, market communication, and internal SMM database models, and are for reference only. They do not constitute any decision-making advice.]