Futures: The most-traded cast aluminium alloy AD2511 contract opened at RMB 20,460 per tonne overnight, hit a high of RMB 20,560 per tonne and a low of RMB 20,405 per tonne, and closed at RMB 20,515 per tonne, up RMB 35 per tonne or 0.17 per cent from the previous close. Trading volume was 970 lots, and open interest was 7,937 lots, with bears mainly reducing positions.
Basis report: According to SMM data, on September 16, the theoretical premium of the SMM ADC12 spot price to the most-traded cast aluminium alloy contract (AD2511) at the 10:15 closing price was RMB 525 per tonne.
Aluminium scrap: On Tuesday, spot primary aluminium prices were flat from the previous trading day, with SMM A00 spot aluminium closing at RMB 20,950 per tonne. Aluminium scrap prices were generally stable. Baled UBC was quoted at RMB 15,750-16,250 per tonne (tax excluded), and shredded aluminium tensile scrap (priced based on aluminium content) was quoted at RMB 17,500-18,000 per tonne (tax excluded).
Baled UBC, shredded aluminium tensile scrap (priced based on aluminium content), scrap wheel hub, and mechanical casting aluminium scrap were flat from the previous trading day. Recently, affected by various factors such as high aluminium price volatility and a worsening aluminium scrap supply deficit, wait-and-see sentiment has gradually intensified in some regional yards, with a significant lag in price adjustments.
Aluminium scrap prices are expected to hover at highs this week, with intensified bargaining between sellers and buyers. From a macro perspective, the cleanup of illegal tax rebates across regions continues to deepen. Although policies are still in a transition period and current purchasing quotes do not yet fully reflect the impact, in the medium and long term, scrap utilisation enterprises will bargain down purchasing prices to pass on rising tax costs, posing a downside risk to aluminium scrap prices.
On the other hand, the tight supply situation is unlikely to improve in the short term, especially the tight supply of shredded aluminium tense scrap resources, which will continue to give suppliers bargaining power. SMM expects the mainstream range for shredded aluminium tensile scrap (priced based on aluminium content) to hover around RMB 17,500-18,000 per tonne, while baled UBC prices will fluctuate between RMB 15,800-16,300 per tonne.
Silicon metal: On September 16, silicon metal prices rose slightly. SMM oxygen-blown #553 silicon in east China was at RMB 9,200-9,400 per tonne, up RMB 100 per tonne from the previous day, and #441 silicon was at RMB 9,500-9,700 per tonne, up RMB 100 per tonne from the previous day.
In the futures market, the silicon metal main continuous contract SI2511 opened at RMB 9,000 per tonne, hit a high of RMB 9,130 per tonne and a low of RMB 8,855 per tonne, and closed at RMB 8,915 per tonne at the end of the session, up RMB 115 per tonne from the previous day. Silicon enterprises in northern China maintained an active willingness to sell, with their quotes more competitive than those of trading firms engaging in both spot and futures markets. The increase in spot transaction prices lagged behind the futures market.
Overseas market: Current overseas ADC12 quotes remain in the range of 2,520-2,550 USD per tonne. Affected by the continued strengthening of the RMB exchange rate, the immediate import loss narrowed again, approaching the break-even line. Local ADC12 offers in Thailand edged down to 81-82 baht per kg.
Inventory side: According to SMM statistics, the daily social inventory of secondary aluminium alloy ingots in Foshan, Ningbo, and Wuxi totalled 48,899 mt on September 17, up 279 mt from the previous trading day.
Summary: Aluminium prices were flat yesterday, with the SMM ADC12 price holding steady at RMB 21,050 per tonne. Due to the tight circulation of aluminium scrap resources both domestically and overseas and increased demand from scrap utilisation enterprises, the aluminium scrap market has become more strained, providing continued cost support for ADC12 prices. Demand side, downstream purchasing sentiment has slightly recovered since September, with demand continuing to rebound, though the actual strength of the traditional peak season remains to be seen. Some enterprises, to ensure order fulfilment, have resorted to high-priced or even cross-regional procurement.
To avoid losses, manufacturers are taking orders more cautiously, actively controlling order sizes and operating rates. Overall, supported by strong cost factors and pre-holiday downstream stocking demand ahead of the National Day holiday, ADC12 prices are expected to hover at highs in the near term. Going forward, close attention should be paid to raw material supply conditions, the pace of demand recovery, and potential market impacts from policy developments.
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.
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