Cast aluminium pulls back slightly, short-term maintains fluctuating consolidation battle

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Futures: Overnight, the most-traded aluminium alloy 2609 contract closed at 22,830, down 135 from the previous period, a decline of 0.59 per cent. Trading volume was 3,301, up 71 M-o-M, and open interest was 19,216, up 129 M-o-M. The current WR indicator at -38.96 is in the mid-range and has not entered an extreme overbought/oversold zone; there is no particularly strong short-term reversal signal, and consolidation-driven trading is prominent. Open interest rose in tandem; bullish-bearish divergence has widened, with funds continuing to enter for positioning, and short-term volatility is likely to remain elevated.

Spot-Futures Price Spread Daily: According to SMM data, on July 10, the theoretical premium of the SMM ADC12 spot price over the 10:15 closing price of the cast aluminium alloy most-traded contract (AD2609) was RMB 1,020 per tonne.

Warrant Daily: SHFE data showed that on July 10, the total registered volume of cast aluminium alloy warrants was 22,212 million tonnes, down 273 million tonnes from the previous trading day. Among them, the total registered volume in Shanghai was 2,157 million tonnes, down 0 million tonnes; Guangdong was 3,114 million tonnes, down 273 million tonnes; Jiangsu was 4,407 million tonnes, down 0 million tonnes; Zhejiang was 7,451 million tonnes, down 0 million tonnes; Chongqing was 4,298 million tonnes, down 0 million tonnes; and Sichuan was 785 million tonnes, down 0 million tonnes.

Aluminium scrap: Last Friday, SMM A00 spot aluminium prices closed at RMB 23,120 per tonne, up RMB 170 per tonne from the previous trading day. The aluminium scrap market generally followed the rise, while some grades in certain regions stabilised and market participants stayed on the sidelines. In terms of the price difference between A00 aluminium and aluminium scrap, on July 10, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB 2,061 per tonne, and the price difference between A00 aluminium and shredded aluminium tense scrap was RMB 747 per tonne. Both slightly stabilised from the previous record lows but remained at extremely low levels; tighter enforcement of reverse invoicing policies provided support, and the “easy to rise, hard to fall” logic for aluminium scrap remained intact. Notably, under the combined impact of a rapid decline in aluminium prices and tight availability of invoices, the price difference between A00 aluminium and aluminium tense scrap narrowed sharply, and some cast aluminium alloy enterprises have begun using A00 aluminium ingot to replace aluminium scrap as raw material for production. The aluminium scrap market is expected to continue to consolidate on a subdued note, but downside room for prices is limited. The mainstream range for shredded aluminium tense scrap priced based on aluminium content is expected to run at RMB 19,200—19,800 per tonne (tax excluded). The price difference between A00 aluminium and aluminium scrap has narrowed to historical lows, significantly weakening aluminium scrap’s economic advantage versus primary aluminium; if aluminium prices continue to fall, the substitution effect will accelerate.

Silicon metal: On July 10, SMM east China non-oxygen blown #553 prices were stable; oxygen-blown #553 prices were raised by RMB 50 per tonne; 521# prices were stable; 441# prices were raised by RMB 50 per tonne; 421# prices were stable; 421# silicone-grade prices were stable; and 3303# prices were stable. Some silicon prices in Kunming, the Northwest region, and Sichuan were lowered. Some silicon prices in Tianjin were raised. Silicon prices in Huangpu Port, South China, Shanghai, and Xinjiang remained stable.

Markets outside China: On the import side, overseas ADC12 quotes were at USD 3,100–3,200 per tonne, and the price spread between Chinese and overseas markets continued to recover. If overseas quotes continue their pullback, the import profit window is expected to gradually open, at which point increased import resources will supplement domestic supply to some extent.

Summary: Last Friday, overall quotes in the ADC12 market were mainly stable and wait-and-see, with only a few enterprises tentatively raising prices by RMB 100 per tonne. This was mainly driven by the strengthening of aluminium prices and futures, aiming for a tentative price adjustment following the cost-side increase. However, from market feedback, most enterprises still chose to remain stable and wait, generally believing that the demand side remains weak. The characteristics of the traditional off-season in July became more apparent, as downstream orders continued to decrease and market transactions were hard to improve significantly. Against the backdrop of limited demand support, although the cost side provided some bottom support to prices, the upward momentum for spot prices remained insufficient, and enterprises’ overall attitude toward price adjustments was relatively cautious. In the short term, the ADC12 spot market is expected to continue moving sideways, with the price centre supported by costs and hard to decline significantly. But before end-use demand sees substantial improvement, the upside room for spot prices is expected to remain somewhat constrained.

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