On Tuesday, aluminum prices once again reached new highs in recent years, with the SMM A00 aluminum price surging by approximately USD 83/mt in a single day to about USD 3,320/mt, bringing the cumulative increase over the past two days to around USD 200/mt.
This has driven up the cost of recycled aluminum raw materials continuously, and the SMM ADC12 price followed with an increase of around USD 55/mt to approximately USD 3,260/mt. However, in the face of the sharp jump in raw material prices, downstream demand remains weak.
Aluminum prices rose on average in 2024. The average monthly price rose from US$2,193 per tonne in January to a peak of US$2,596 in October, before easing slightly to US$2,541 in December. The overall average monthly price for 2024 was US$2,419, up from US$2,256 in 2023.
Aluminum prices, monthly average, 2015–2024
Die-casting enterprises, squeezed by both reduced orders and high raw material costs, are purchasing cautiously with strong risk-aversion sentiment. Inquiries are frequent, but market transactions are scarce. Some downstream players, unable to pass on the sudden cost increases, are considering production cuts or even shutdowns to alleviate operational pressure.
Overall, the current secondary aluminum market is influenced by a mix of bullish and bearish factors: cost-driven and tight supply conditions provide support for prices, while weak downstream demand and fear of high prices exert downward pressure. Nevertheless, the continued release of macro tailwinds in the short term will provide a boost to the market, and ADC12 prices are expected to continue fluctuating at high levels.
Futures Market
The aluminum alloy 2603 contract opened at approximately USD 3,370/mt, hit a high of about USD 3,435/mt, a low of around USD 3,360/mt, and closed at approximately USD 3,430/mt, with a single-day gain of 1.48% and an intraday fluctuation range of 2.58%, showing a strong breakout and upward trend, with prices hitting a recent new high.
Trading volume was 327,300 lots, an increase of 47,418 lots from the previous session. Open interest stood at 253,400 lots, up slightly by 392 lots. The amplified trading volume, combined with rising prices, indicates that bullish funds actively entered the market, with buying momentum clearly dominating.
Resistance above is seen near USD 3,435/mt; a breakout could open room for further upside. Support below is first seen near USD 3,400/mt, followed by USD 3,360/mt.
Basis Report
According to SMM data, on January 6, the SMM ADC12 spot price showed a theoretical premium of approximately USD 82/mt to the closing price of the most-traded cast aluminum alloy futures contract (AD2603) at 10:15.
Warrant Report
SHFE data showed that on January 6, the total registered volume of cast aluminum alloy warrants was 69,198 mt, down 422 mt from the previous trading day.
- Shanghai: 4,757 mt, unchanged
- Guangdong: 22,238 mt, down 30 mt
- Jiangsu: 12,082 mt, down 119 mt
- Zhejiang: 23,782 mt, down 273 mt
- Chongqing: 5,919 mt, unchanged
- Sichuan: 420 mt, unchanged
Aluminum Scrap Market
On Tuesday, the spot price of primary aluminum rose significantly compared with the previous trading day, with SMM A00 spot aluminum closing at approximately USD 3,320/mt. The aluminum scrap market followed the rise in primary aluminum prices.
- Baled UBC scrap was quoted centrally at approximately USD 2,430–2,500/mt (tax excluded)
- Shredded aluminum tense scrap, priced based on aluminum content, was quoted at approximately USD 2,680–2,750/mt (tax excluded)
Driven by the surge in primary aluminum prices, scrap prices in Shanghai, Zhejiang, Jiangsu, Tianjin, Shandong, and Jiangxi increased by around USD 55–83/mt, while prices in Guizhou, Henan, and Hubei rose by approximately USD 42–55/mt.
Domestic aluminum scrap prices are expected to fluctuate at elevated levels this week, following primary aluminum trends, while the risk of a pullback from high levels remains. On the supply side, the issue of tax burden shifting continues to affect the market supply structure.
Silicon Metal
On January 6, the silicon metal market remained stagnant and consolidative. Futures prices moved sideways before strengthening later in the session.
- Oxygen-blown #553 silicon (East China): approximately USD 1,280–1,290/mt
- #441 silicon: approximately USD 1,290–1,320/mt
The most-traded silicon futures contract closed at around USD 1,235/mt, up approximately USD 24/mt from the previous day, mainly driven by fund sentiment. Downstream silicone enterprises held another meeting to support prices later this week, drawing attention to potential downstream impacts.
Overseas Market
Overseas ADC12 offers continued to rise to approximately USD 2,820–2,850/mt, with a smaller increase compared to the domestic Chinese market. As a result, the real-time import profit margin expanded again to about USD 42/mt.
Summary
On Tuesday, aluminum prices once again hit new highs in recent years, with the SMM A00 aluminum price rising by approximately USD 83/mt in a single day to around USD 3,320/mt, bringing the cumulative two-day increase to about USD 200/mt. This has continued to push up the cost of recycled aluminum raw materials, with SMM ADC12 prices increasing by around USD 55/mt to approximately USD 3,260/mt.
However, downstream demand remains weak. Die-casting enterprises, under pressure from both declining orders and elevated raw material prices, are purchasing cautiously. While inquiries remain active, actual market transactions are limited. Some downstream players, unable to pass on sudden cost increases, are considering production cuts or even temporary shutdowns to ease operational pressure.
Overall, the secondary aluminum market is currently shaped by opposing forces: cost support and tight supply underpin prices, while weak downstream demand and fear of high prices weigh on sentiment. In the short term, ongoing macro tailwinds are expected to provide support, with ADC12 prices likely to continue fluctuating at high levels.
Data Source Statement:
Except for publicly available information, other data are derived by SMM through processing based on public information, market communication, and SMM’s internal database models, and are for reference only and do not constitute decision-making advice.
