9.5 SMM Cast Aluminium Alloy Morning Comment
Futures: The most-traded cast aluminium alloy ad2511 contract opened at RMB 20,220 per tonne overnight, hitting a high of RMB 20,305 per tonne and a low of RMB 20,205 per tonne, before closing at RMB 20,215 per tonne, flat from the previous close. Trading volume stood at 514 lots, with open interest at 7,732 lots, mainly driven by long position increases.
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Spot-Futures Price Spread Report: According to SMM data, the theoretical premium of the SMM ADC12 spot price over the closing price of the most-traded cast aluminium alloy contract (AD2511) at 10:15 on September 4 was RMB 535 per tonne.
Aluminium scrap: On Thursday, spot primary aluminium prices pulled back from the previous trading day, with SMM A00 spot aluminium closing at RMB 20,610 per tonne. Aluminium scrap market prices showed significant divergence in adjustments.
As the traditional peak season begins, orders at some downstream scrap utilisation enterprises recovered. However, tight supply remains the dominant theme in the scrap market, keeping procurement prices elevated. Regionally, Shanghai, Jiangsu, Shandong, and Henan closely followed aluminium price movements with adjustments of RMB 50-100 per tonne, while Jiangxi, Hubei, Foshan, and Anhui lagged behind, holding steady w-o-w. Recent substantial price adjustments in some regions stem from unverified policy implementations exacerbating supply shortages, forcing some scrap processors to raise raw material recovery prices to maintain production.
SMM expects aluminium scrap prices to hover at highs this week amid an intensified tug-of-war between sellers and buyers. Shredded aluminium tensile scrap (priced based on aluminium content) is projected to trade mainly between RMB 17,200-17,700 per tonne (ex-tax), while baled UBC prices may fluctuate around RMB 15,500-16,000 per tonne (ex-tax), supported by rigid demand.
Silicon metal: (1) Prices: Spot silicon metal prices showed relatively small w-o-w changes with a slightly weaker centre w-o-w. Yesterday, oxygen-blown #553 silicon in east China traded at RMB 9,000-9,200 per tonne, flat from the previous day, while #441 silicon held steady at RMB 9,300-9,500 per tonne.
In futures, the most-traded silicon metal contract experienced significant volatility due to market rumours, reaching a daily high of RMB 8,670 per tonne and a low of RMB 8,385 per tonne before closing at RMB 8,515 per tonne, up RMB 25 per tonne from the previous day. The silicon market saw demand-based transactions. (2) Social Inventory: SMM data showed total silicon metal social inventory across major regions stood at 537,000 tonnes as of September 4, down 4,000 tonnes w-o-w. This includes 117,000 tonnes in regular social warehouses (down 2,000 tonnes w-o-w) and 420,000 tonnes in delivery warehouses (including unregistered warrants and spot cargo, down 2,000 tonnes w-o-w). (Excluding Inner Mongolia, Gansu, etc.)
Overseas market: Current overseas ADC12 offers range between USD 2,500-2,520 per tonne, with import parity maintained around RMB 300 per tonne. Local ex-tax ADC12 quotes in Thailand temporarily stand at 83-84 baht per kg.
Inventory: According to SMM statistics, the social inventory of secondary aluminium alloy ingots in mainstream domestic consumption areas stood at 40,197 tonnes on September 4, an increase of 2,673 tonnes w-o-w.
Summary: Aluminium prices extended declines on Thursday, while secondary aluminium producers held quotes largely steady, with the SMM ADC12 price unchanged at RMB 20,750 per tonne. Tight availability of aluminium scrap and rising procurement costs for enterprises continued to hold ADC12 market quotes firm.
Downstream consumption is in a narrow recovery phase, with limited growth in enterprise orders, and the peak season effect is yet to fully materialise. In the near term, ADC12 prices are expected to hover at highs, supported by costs, but upside room is limited by weak demand recovery and accumulating social inventory. Subsequent trends require close monitoring of raw material supply, the pace of demand recovery, and 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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