The price of cast aluminum futures saw an increase in today's trading session.
At the Shanghai Futures Exchange, the main cast aluminum alloy contract for August 2024 (2608) exhibited a strong, fluctuating performance.
By the market close at 15:00, the main cast aluminum contract had settled at 23,270 yuan per tonne, marking a gain of 225 yuan or 0.98%.
Total trading volume for the day reached 7,935 lots, representing a decrease of 195 lots, while open interest increased by 135 lots to 15,606.
Spot Market Overview
Data from the Changjiang Nonferrous Metals Network on June 11th indicates the following spot prices for various cast aluminum alloys.
Alloy ADC12 was quoted between 23,500 and 23,700 yuan per tonne, with an average price of 23,600 yuan, up 100 yuan.
Cast aluminum alloy ingot (A356.2) was priced between 24,300 and 24,700 yuan per tonne, averaging 24,500 yuan, also an increase of 100 yuan.
The price for cast aluminum alloy ingot (A380) ranged from 25,700 to 25,900 yuan per tonne, with an average of 25,800 yuan, up 100 yuan.
Cast aluminum alloy ingot (ZL102) was quoted between 24,200 and 24,400 yuan per tonne, averaging 24,300 yuan, a rise of 100 yuan.
Similarly, cast aluminum alloy ingot (ZLD104) traded between 24,200 and 24,400 yuan per tonne, with an average price of 24,300 yuan, up 100 yuan.
Market Analysis
On the macroeconomic front, the release of the US Consumer Price Index (CPI) data for May influenced market sentiment.
The unadjusted annual CPI rate came in at 4.2%, aligning with market expectations and showing an increase from the previous 3.8%, marking the highest level since April 2023.
A significant rise in the energy component, driven by oil price increases due to Middle East conflicts, contributed to this figure.
Following the data release, market expectations for a Federal Reserve interest rate hike within the year cooled slightly, with a high probability seen for the central bank holding rates steady in June.
The US dollar index experienced intraday volatility but remained above 99.9, with the implied probability of a rate hike this year around 70%.
Geopolitical tensions, including risks to shipping in the Strait of Hormuz, continue to support a premium for overseas primary aluminum supply shortages, leading to some capital flowing back into long positions and supporting the strength in cast aluminum futures.
The industrial fundamentals maintain a tug-of-war between strong costs and weak demand.
On the supply side, stricter policies regarding "reverse invoicing" have led to a structural shortage of compliant scrap aluminum, keeping the price spread between refined and scrap metal at low levels and providing strong cost support for secondary aluminum producers.
On the demand side, the market has entered the traditional off-season consumption cycle.
Downstream die-casting enterprises are seeing limited new orders, with performance in sectors like automotive and 3C electronics remaining subdued.
Social inventories of alloy ingots are beginning to accumulate seasonally, indicating marginal pressure from the supply side.
However, data from the China Association of Automobile Manufacturers shows that in May, production and sales of new energy vehicles reached 1.554 million and 1.496 million units respectively, representing year-on-year increases of 22.4% and 14.4%.
New energy vehicles accounted for 56.9% of new car sales, providing a medium to long-term expectation for increased aluminum demand for vehicle lightweighting, which offers some upward momentum for cast aluminum alloys.
In the spot market, holders showed a strong willingness to sell on price rallies, while downstream buyers were generally cautious about chasing the higher prices.
Nevertheless, some end-users with immediate needs were prompted to replenish inventories due to the price increase, and inquiries from traders showed a slight uptick in activity, resulting in an overall moderate trading atmosphere.
Overall Outlook
In summary, the in-line US inflation data for May has alleviated short-term fears of unexpectedly aggressive monetary tightening, but with the US dollar remaining strong and expectations for a rate hike this year still present, the broader macroeconomic sentiment remains cautious.
Significant geopolitical uncertainties persist, and the ongoing narrative of overseas primary aluminum supply shortages continues to provide a floor for prices of both primary aluminum and its alloys.
Cast aluminum alloy itself lacks an independent price driver, with its price movements closely following those of primary aluminum, caught in a tug-of-war between off-season demand pressure and the strong cost support from scrap aluminum.
The expected trading range for the main contract tomorrow is projected to be between 22,800 and 23,650 yuan per tonne.
Comments