9.15 SMM cast aluminium alloy morning comment
Futures: On friday night, the most-traded cast aluminium alloy ad2511 futures contract opened at RMB 20,505 per tonne, with a high of RMB 20,650 per tonne and a low of RMB 20,475 per tonne, and closed at RMB 20,645 per tonne, up RMB 170 per tonne or 0.83 per cent from the previous close. Trading volume was 2,883 lots, and open interest was 8,598 lots, with the increase mainly driven by bulls. 
Basis report: According to SMM data, on September 12, the theoretical premium of SMM ADC12 spot price to the most-traded cast aluminium alloy futures contract (AD2511) 10:15 closing price was RMB 450 per tonne.Aluminium scrap side: On friday, spot primary aluminium prices rose from the previous trading day, with SMM A00 spot closing at RMB 21,020 per tonne, and aluminium scrap market prices generally followed the increase.
Baled UBC rose RMB 100 per tonne w-o-w, while shredded aluminium tensile scrap (priced based on aluminium content), scrap wheel hub, and mechanical casting aluminium scrap rose RMB 200 per tonne w-o-w. In Jiangxi, Hunan, Anhui and other regions, aluminium tensile scrap prices were raised again on Friday, with an increase of up to RMB 200 per tonne.
Recently, aluminium scrap prices in some regions have seen large adjustments, as policy implementation has not been further confirmed, market supply shortages have intensified, and some scrap utilisation enterprises have had to raise raw material recycling prices to ensure production.
Aluminium scrap prices are expected to hover at highs this week, with intensified bargaining between sellers and buyers. Macro perspective, the cleanup of illegal tax refunds across regions continues to deepen. Although policies are still in a transition period and current purchasing quotes do not yet fully reflect the impact, medium and long-term, scrap utilisation enterprises will bargain down purchasing prices to pass on rising tax costs, posing downside risks to aluminium scrap prices.
On the other hand, the tight supply situation is unlikely to improve in the short term, especially since the tight supply of shredded aluminium and tense scrap resources will continue to give suppliers bargaining power. SMM expects that the mainstream range for shredded aluminium tensile scrap (priced based on aluminium content) will hover around RMB 17,500-18,000 per tonne, while baled UBC prices will linger at RMB 15,800-16,300 per tonne.
Silicon metal side: Last week, the price centre of silicon metal was strong. On Friday, SMM east China oxygen-blown #553 silicon was at RMB 9,100-9,300 per tonne, and #441 silicon was at RMB 9,400-9,600 per tonne. On friday, the most-traded futures contract closed at RMB 8,745 per tonne, and market trading was light. This week, the downstream polysilicon industry conference may affect the silicon metal market sentiment. Pay attention to the conference results and downstream stocking pace before the National Day holiday.
Overseas market: Current overseas ADC12 offers have risen to the range of 2,520-2,550 USD per mt. Affected by the strengthening RMB exchange rate, the immediate import loss has narrowed to within RMB 200 per tonne. Local ADC12 ex-tax offers in Thailand were slightly lowered to 81-82 THB per kg.
Inventory side: According to SMM statistics, on September 15, the daily social inventory of secondary aluminium alloy ingots in Foshan, Ningbo, and Wuxi totalled 48,518 mt, an increase of 261 mt from the previous trading day.
Summary: Last Friday, aluminium prices broke through the RMB 21,000 per tonne mark, and the SMM ADC12 price rose again by RMB 100 per tonne to RMB 20,950 per tonne. Affected by tight domestic and overseas aluminium scrap circulation resources and increased demand from scrap utilisation enterprises, the aluminium scrap market shortage intensified, with hoarding pushing prices up rapidly.
To ensure order delivery, some manufacturers procured at high prices or across regions, and rising costs further boosted ADC12 prices. Demand side, since September, downstream procurement sentiment has slightly recovered, and demand continues to rebound, but the actual strength of the traditional peak season remains to be verified. To avoid losses, manufacturers have become cautious in taking orders, actively controlling order size and operating levels.
Overall, in the short term, ADC12 prices are expected to continue fluctuating at highs with cost support, but limited demand recovery and increasing social inventory will still cap upside room. Follow-up attention should focus on raw material supply conditions, demand recovery progress, and potential market impacts from policies.
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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