Futures: The most-traded cast aluminium alloy 2602 contract opened higher overnight, hitting a high of RMB 21,200 per tonne before pulling back, then fluctuated upward and closed at RMB 21,175 per tonne, up 0.5per cent from the previous close. It has shown an upward trend with fluctuations recently, closing with a small bullish candlestick last night, with the price above short-term moving averages. Open interest increased by 94 lots, as bulls increased positions slightly, while trading volume decreased somewhat, indicating cautious market sentiment.
Basis daily: According to SMM data, on December 4, the SMM ADC12 spot price showed a theoretical premium of RMB 590 per tonne against the closing price of the most-traded cast aluminium alloy contract (AD2601) at 10:15.
Warrant daily: SHFE data showed that on December 4, the total registered warrants for cast aluminium alloy stood at 66,164 tonnes, an increase of 1,607 tonnes from the previous trading day. By region: Shanghai (4,757 tonne, unchanged m-o-m), Guangdong (21,133 tonne, up 737 tonne m-o-m), Jiangsu (11,509 tonne, up 570 tonne m-o-m), Zhejiang (22,037 tonne, up 389 tonne m-o-m), Chongqing (6,308 tonne, unchanged m-o-m), and Sichuan (420 tonne, up 300 tonne m-o-m).
Aluminium scrap: On Thursday, spot primary aluminium prices rose significantly from the previous trading day, with SMM A00 aluminium closing at RMB 22,020 per tonne, and the aluminium scrap market followed the increase. Entering December, downstream demand for aluminium scrap showed clear divergence. Demand for scrap used in cast aluminium alloys remained stable with a slight increase, providing more support for consumption.
In Henan, enhanced year-end environmental protection inspections and transport restrictions affected delivery efficiency. Meanwhile, some scrap utilisation enterprises reported high inventories of extrusion scrap accumulated during the peak season, with insufficient orders on hand to hedge raw material inventories, leading to a temporary slowdown in the procurement of extrusion scrap. Yesterday, baled UBC was quoted at RMB 16,400-16,900 per tonne (ex-tax), and shredded aluminium tensile scrap (priced based on aluminium content) was quoted at RMB 18,400-18,900 per tonne (ex-tax).
Baled UBC prices rose RMB 100 per tonne m-o-m, while clean tapping aluminium wire, mixed aluminium extrusion scrap free of paint, mechanical casting aluminium scrap, scrap motorcycle wheel, and mixed aluminium tense scrap prices increased RMB 200 per tonne m-o-m. Regarding the price difference between A00 aluminium and aluminium scrap, on December 4, the price difference between A00 aluminium and shredded aluminium tensile scrap closed at RMB 1,749 per tonne, and the price difference for bare bright aluminium wire in Jiangsu was RMB 891.3 per tonne.
The aluminium scrap market is expected to hover at highs next week, guided primarily by primary aluminium price trends, coupled with impacts from environmental protection-driven production restrictions and transport constraints in central China, keeping market sentiment cautious. The tug-of-war between sellers and buyers continues, requiring close monitoring of primary aluminium fluctuations, environmental protection policies, and downstream procurement pace, while staying alert to risks of a pullback from highs.
Silicon metal: (1) Prices: Silicon metal prices remained range-bound with a weak bias this week, with SMM oxygen-blown #553 silicon in east China at RMB 9,400-9,500 per tonne and #441 silicon at RMB 9,600-9,700 per tonne.
The Si2601 futures contract closed at RMB 8,910 per tonne, and the decline in futures stimulated an increase in downstream buying demand. (2) Social Inventory: According to SMM statistics, the total social inventory of silicon metal in major regions stood at 558,000 tonnes on December 4, an increase of 8,000 tonnes w-o-w. This included 131,000 tonnes in general social warehouses, up 2,000 tonnes w-o-w, and 427,000 tonnes in social delivery warehouses (including unregistered warrants and spot inventory portions), an increase of 6,000 tonnes w-o-w (excluding Inner Mongolia, Ningxia, Gansu, etc.).
Overseas market: The current overseas ADC12 quotation range was USD 2,600–2,640 per tonne. Due to the rapid price surge in the domestic market, the immediate import loss narrowed significantly to around RMB 200 per tonne.
Inventory: According to SMM statistics, the social inventory of secondary aluminium alloy ingots in mainstream domestic consumption areas was 55,300 tonnes on December 4, a decrease of 335 tonnes from last Thursday.
Summary: Yesterday, the gain in the most-traded casting aluminium futures contract narrowed significantly compared to SHFE aluminium futures, and the price spread between ADC12 and AL widened to RMB 990 per tonne. Currently, registered warrants for aluminium alloy are at high levels, while traders face difficulties in selling goods under high aluminium prices, leading to weak destocking and putting pressure on the futures trend. Spot side, ADC12 prices actively followed the rise, increasing by RMB 200 per tonne to RMB 21,700 per tonne, and the inverted spread with A00 aluminium expanded again. Cost side, aluminium scrap prices followed aluminium prices and rose sharply today, while copper prices reached a new high above RMB 91,245 per tonne, leading to continuously rising raw material costs.
The cost proportions of aluminium scrap and copper auxiliary materials continued to increase, with cost remaining the main driver for ADC12 price increases. Demand side, aluminium prices hitting the yearly peak suppressed the short-term procurement pace among downstream users. Some die-casting enterprises saw profit margins shrink due to cost pressure, and some fell into losses, leading to a decline in operating rates. However, end-user demand for pushing annual targets at year-end still supported industry resilience. Overall, ADC12 prices are expected to continue fluctuating at highs in the short term.
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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