Aluminium prices cease rising and retreat, supply shortage continues to support aluminium alloy

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1.9 SMM cast aluminium alloy morning comment

Futures: The aluminium alloy 2603 contract rose to 23,480 and then quickly pulled back, opening at 22,720, reaching a high of 22,820, and dropping to a low of 22,180, finally closing at 22,495, down 90 points (-0.40 per cent) from the previous value. The high-low price difference reached 325 points (1.42 per cent), showing a weak pattern of retreating after a rapid rise and sideways movement. Trading volume was 6,679 (down 4,592 from the previous day), and open interest was 20,952 (down 56). The synchronised reduction in volume and open interest indicates a decrease in short-term capital participation, with the market lacking active trading momentum during the pullback, and both long and short positions temporarily in a wait-and-see state.

Daily basis report: According to SMM data, on January 8, the SMM ADC12 spot price had a theoretical premium of RMB 595 per tonne over the closing price at 10:15 am of the most-traded cast aluminium alloy contract (AD2603).

Daily warrant report: SHFE data showed that on January 8, the total registered amount of cast aluminium alloy warrants was 69,737 tonnes, an increase of 391 tonne from the previous trading day. Among them, the total registered amount in Shanghai was 4,757 tonne, unchanged from the previous trading day; in Guangdong, it was 22,207 tonne, down 31 tonne; in Jiangsu, it was 12,591 tonne, up 571 tonne; in Zhejiang, it was 23,542 tonne, down 149 tonne; in Chongqing, it was 5,919 tonne, unchanged; and in Sichuan, it was 721 tonne, also unchanged.

Aluminium scrap: On Thursday, the spot primary aluminium price fell slightly compared to the previous trading day, with SMM A00 spot closing at RMB 24,000 per tonne, and the aluminium scrap market followed the decline in primary aluminium prices. Baled UBC scrap aluminium prices were concentrated at RMB 17,700-18,100 per tonne (excluding tax), and shredded aluminium tense scrap (priced based on aluminium content) prices were concentrated at RMB 19,300-19,800 per tonne (excluding tax). Prices in Shanghai, Zhejiang, Jiangsu, Tianjin, Shandong, and Jiangxi today retreated by RMB 100-200 per tonne. It is expected that next week, the aluminium scrap market will hover at highs, with the main range for shredded aluminium tense scrap (priced based on aluminium content) being RMB 18,800-19,200 per tonne (excluding tax). The tug-of-war between sellers and buyers continues, and it is necessary to closely monitor the trend of primary aluminium, the progress of downstream production halts, and pre-holiday transaction conditions, while being vigilant about the risk of a pullback from highs.

Silicon metal: This week, the spot silicon metal prices remained stable, while futures prices held up well before a significant downward adjustment. SMM east China oxygen-blown #553 silicon was priced at RMB 9,200-9,300 per tonne, and #441 silicon at RMB 9,300-9,500 per tonne. In the futures market, the SI most-traded contract saw a steeper decline in the afternoon, closing at RMB 8,535 per tonne, down RMB 445 per tonne from the previous day. There was a large disparity in quotes from different types of silicon suppliers, with downstream buyers and traders buying the dip. Overseas Market: Current overseas ADC12 prices are steady in the USD 2,820–2,850 per tonne range, with real-time profit margins still around RMB 500 per tonne.

Summary: Aluminium prices stopped rising and corrected, with the SMM A00 aluminium price falling by RMB 140 per tonne to RMB 24,000 per tonne, while the SMM ADC12 price remained stable at RMB 23,700 per tonne. Although the A00 aluminium price experienced a slight correction, it stayed above RMB 24,000. In the secondary aluminium market, most morning offers held steady, but some producers followed the decline by RMB 100-200 per tonne in the afternoon, influenced by a significant drop in futures. Amid the falling prices, downstream buyers exhibited a strong wait-and-see sentiment, with only limited restocking for rigid demand, resulting in sluggish transactions. The current secondary aluminium market is influenced by a mix of bullish and bearish factors: cost support and tight supply provide a floor for prices, but weak downstream demand and fear of high prices exert downward pressure. It is expected that ADC12 prices will show a high-level correction trend in the short term.

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.