Overall, influenced by the US Fed's interest rate cut realisation, macro sentiment was under pressure, while fundamentals saw a tug-of-war between longs and shorts: cost rigidity and pre-holiday stockpiling demand provided support, but weak demand recovery and inventory buildup risks posed constraints. ADC12 prices are expected to hover at highs in the short term. Subsequent attention should be closely paid to raw material supply conditions, the pace of demand recovery, changes in registered warrants, and policy implementation.
Futures: The most-traded cast aluminium alloy ad2512 futures contract opened at RMB 20,320 per tonne overnight, hit a high of RMB 20,480 per tonne and a low of RMB 20,310 per tonne, and closed at RMB 20,325 per tonne, up RMB 5 per tonne or 0.02 per cent from the previous close. Trading volume was 2,261 lots, and open interest was 10,294 lots, with the increase mainly from bulls.
Spot-futures price spread report: According to SMM data, on September 18, the theoretical premium of SMM ADC12 spot price to the most-traded cast aluminium alloy futures contract (AD2511) 10:15 closing price was RMB 560 per tonne.
Industry dynamics: As the National Day holiday approaches, some die-casting enterprises have released their holiday schedules. According to the SMM survey, most enterprises plan to start the holiday from October 1. Specifically, over 20 per cent of enterprises will suspend production for no more than 2 days, nearly 60 per cent for 8 days or more, and about 20 per cent for 3 to 6 days. Most enterprises are expected to resume work after October 6. Due to poor order conditions, enterprises have limited stockpiling scale for finished product inventories.
Aluminium scrap side: On Thursday, spot primary aluminium continued to fall from the previous trading day, with SMM A00 spot closing at RMB 20,780 per tonne, and aluminium scrap prices followed the decline overall. Baled UBC was mainly offered at RMB 15,600-16,100 per tonne (ex-tax), shredded aluminium tense scrap (priced based on aluminium content) was mainly offered at RMB 17,300-17,800 per tonne (ex-tax price). Baled UBC, shredded aluminium tense scrap (priced based on aluminium content), scrap wheel hub, and mechanical casting aluminium scrap were down RMB 100 per tonne M-o-M from the previous trading day. As over half of September has passed, enterprises in some regions of Henan, Jiangxi, and Anhui reported that they have started stockpiling production raw materials in advance for the National Day holiday, and had to pay higher prices for materials amid aluminium scrap shortages. Aluminium scrap prices are expected to continue fluctuating at highs next week, with both downside risks and cost support. From a macro perspective, the US Fed interest rate cut has intensified market volatility. Although the domestic tax cleanup policy is in a transition period, it will still push up the tax costs for scrap utilisation enterprises in the medium and long term and be transmitted to bargain down purchasing prices. On the other hand, the tight supply of aluminium scrap is difficult to alleviate in the short term, especially the tight supply of shredded aluminium tense scrap resources gives suppliers strong bargaining power. SMM expects that the mainstream range for shredded aluminium tense scrap (priced based on aluminium content) will hover around 17,300-17,800 yuan/mt, and baled UBC prices will linger at RMB 15,600-16,100 per tonne. The market needs to closely monitor the implementation pace of the tax policy, the sustainability of downstream stocking demand, and the guidance of primary aluminium prices.
Silicon metal side: (1) Price: Spot silicon metal prices maintained strong consolidation this week. Yesterday, SMM oxygen-blown #553 silicon in east China was at RMB 9,200-9,500 per tonne, and #441 silicon was at RMB 9,500-9,700 per tonne. In the futures market, the silicon metal main continuous contract jumped initially and then pulled back yesterday, closing at RMB 8,905 per tonne at the end of the session, down RMB 60 per tonne from the previous day. This week, northern silicon enterprises were more active in selling. Some silicon enterprises offered prices lower than those of trading firms engaging in both spot and futures market, leading to moderate sales for the former. The latter's spot-futures price spread quotations lacked competitiveness, resulting in sluggish sales. Overall, the transaction centre rose W-o-W. (2) Production: In September, the operating capacity in the north increased compared to August, and the national silicon metal production continued to increase. (3) Inventory: According to SMM, on September 18, the total social inventory of silicon metal in major regions was 543,000 tonne, up 4,000 tonnes W-o-W. Among them, the general social warehouse inventory was 120,000 tonnes, up 1,000 tonnes W-o-W, and the social delivery warehouse inventory (including unregistered warrants and spot parts) was 423,000 tonnes, up 3,000 tonnes W-o-W. (Excluding Inner Mongolia, Gansu, etc.)
Overseas market: Overseas ADC12 quotes concentrated at USD 2,530–$2,550 per tonne. Domestic spot prices fell by RMB 200 per tonne within the week to RMB 20,100–20,300 per tonne, with immediate import losses still hovering around RMB 200 per tonne. Thai local ADC12 tax-excluded quotes remained at 81-82 baht per kg.
Inventory: As per SMM, on September 18, the social inventory of secondary aluminium alloy ingots in major domestic consumption areas was 55,300 tonnes, up 1,500 tonnes from last Thursday.
Summary: Yesterday, aluminium prices fell sharply, with SMM ADC12 prices dropping by RMB 100 per tonne to RMB 20,950 per tonne. During the week, as aluminium prices retreated, the willingness to sell among aluminium scrap traders increased, marginally improving market circulation. The pressure on raw material procurement for secondary aluminium plants eased slightly, but the overall tight supply situation remained unchanged. More than half of September has passed, and downstream recovery remains mild, with a lukewarm peak season performance. Approaching the National Day holiday, die-casting enterprises are gradually finalising their holiday arrangements, and pre-holiday stocking demand is providing temporary support to spot prices. Additionally, influenced by the strengthening of the spot-futures price spread, trading activity in the market improved this week. Overall, under the impact of the US Fed interest rate cut, macro sentiment is under pressure, while fundamentals show a tug-of-war between longs and shorts: rigid costs and pre-holiday stockpiling demand provide support, but weak demand recovery and the risk of inventory accumulation pose constraints. It is expected that ADC12 prices will fluctuate at highs in the short term, and close attention should be paid to the status of raw material supply, the pace of demand recovery, changes in registered warrants, and policy implementation.
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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