Holiday stockpiling meets chill, cast aluminium alloy's short-term highs hard to change

Futures: Last night, the most-traded AD2603 futures contract opened and then rose rapidly, hitting a high of RMB 23,990 per tonne, with the gain once approaching 1.91 per cent. It then pulled back quickly and finally closed at RMB 23,590 per tonne, down RMB 195 per tonne or 0.82 per cent from the previous close, mainly due to long position reduction. Overall, it showed a pattern of "retreat after rapid rise," and the KD indicator also retreated from highs, indicating short-term bullish momentum weakened.

Spot-futures price spread daily: According to SMM data, on January 28, the theoretical spot-futures price spread between the SMM ADC12 spot price and the 10:15 closing price of the most-traded cast aluminium alloy futures contract (AD2603) was RMB 960 per tonne.

Warrant daily: SHFE data showed that on January 28, the total registered volume of cast aluminium alloy warrants was 67,659 tonnes, an increase of 125 tonnes from the previous trading day. By region: Shanghai's total registered volume was 5,120 tonne (up 607 tonne); Guangdong's total registered volume was 23,526 tonne (unchanged); Jiangsu's total registered volume was 10,787 tonne (down 211 tonne); Zhejiang's total registered volume was 21,646 tonne (down 271 tonne); Chongqing's total registered volume was 5,889 tonne (unchanged); Sichuan's total registered volume was 691 tonne (unchanged).

Aluminium scrap side: On Wednesday, spot primary aluminium prices rose significantly compared to the previous trading day, with the SMM A00 spot price closing at RMB 24,260 per tonne. Aluminium scrap market prices generally followed the increase today. Yesterday, baled UBC was quoted at RMB 17,500-18,000 per tonne (ex-tax), and shredded aluminium tensile scrap (priced based on aluminium content) was quoted at RMB 19,800-20,200 per tonne (ex-tax). Regarding the price difference between A00 aluminium and aluminium scrap: on January 28, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB 3,375 per tonne, and the price difference between A00 aluminium and shredded aluminium tensile scrap was RMB 2,461 per tonne. Shanghai, Jiangsu, Shandong, and Jiangxi closely followed the aluminium price rise, while Henan, Foshan, Guizhou, and Anhui adjusted prices more cautiously that day, rising by RMB 100-200 per tonne. Recently, directly affected by recycling policies and forced to follow the high aluminium prices, the market has shown a situation of "nominal prices without actual transactions."

Scrap utilisation enterprises in related provinces were forced to reduce or halt production, downstream buying sentiment was dampened, and purchasing was as needed. The aluminium scrap market is expected to hover at highs this week, with shredded aluminium tensile scrap (priced based on aluminium content) mainly in the range of RMB 19,700-20,200 per tonne (ex-tax). Downward pressures remain: as the Chinese New Year approaches, enterprises are gradually entering holiday schedules; scrapyard holidays starting early reduce market liquidity; downstream operations remain sluggish with strong resistance to high prices. It is necessary to closely track primary aluminium trends, weather changes, and pre-holiday production halt schedules, and be alert to the risk of a pullback from highs.

Silicon metal: On January 28, SMM non-oxygen blown #553 in east China was at RMB 9,100-9,300 per tonne; oxygen-blown #553 at RMB 9,200-9,300 per tonne; #521 at RMB 9,300-9,500 per tonne; #441 at RMB 9,400-9,600 per tonne; #421 at RMB 9,500-9,800 per tonne; #421 for silicone use at RMB 9,800-10,200 per tonne; #3303 at RMB 10,200-10,500 per tonne. Some silicon prices in north-west China continued to rise.

Overseas market: Current overseas ADC12 offers remained stable at USD 2,850-2,880per tonne, while domestic spot prices adjusted actively, with import arbitrage widening to around RMB 600 per tonne.

Summary: On Wednesday, aluminium prices were quoted at RMB 24,260 per tonne, up RMB 390 per tonne; SMM ADC12 rose RMB 150 per tonne to RMB 24,150 per tonne. As ADC12 showed relative resilience during the early-week aluminium price pullback, secondary aluminium enterprises adjusted prices cautiously before noon, generally following the increase by RMB 100-200 per tonne. However, after 11 a.m., as futures continued to surge, market participants showed a stronger willingness to catch up with gains, leading to a further increase of RMB 200-300 per tonne on top of the previous adjustments. In terms of transactions, the "price without market" feature became more pronounced, with downstream buyers showing strong fear of high prices, resulting in thin overall trading. Affected by this, pre-holiday stockpiling enthusiasm was dampened again, and some enterprises have planned to enter holiday mode early. Demand is expected to continue weakening. Overall, although high aluminium prices and seasonal off-season demand suppress market activity, support from aluminium scrap prices on the cost side, coupled with supply tightening due to policy and environmental protection factors, suggests that secondary aluminium alloy prices are expected to continue fluctuating at highs in the short term. Subsequent focus should be on raw material circulation, downstream operating rates, and pre-holiday stockpiling sentiment.

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.