Spot prices for cast aluminum alloys in the Yangtze River region showed gains on Tuesday, according to market data.
On the Shanghai Futures Exchange, the main cast aluminum contract for August 2024 (2608) experienced a day of mixed trading, rising initially before giving back some gains. At the 3:00 PM close, the contract settled at 22,415 yuan per tonne, marking a modest increase of 10 yuan, or 0.04%. Daily trading volume reached 10,451 lots, an increase of 3,855 lots from the previous session, while open interest rose by 9,256 lots to 16,894 lots.
Data from the Yangtze River Nonferrous Metals Network indicated the following spot price movements as of July 2nd. For alloy ADC12, prices were quoted in the range of 23,400 to 23,600 yuan per tonne, with an average of 23,500 yuan, up 100 yuan. Cast aluminum alloy ingot (A356.2) was quoted between 22,900 and 23,300 yuan per tonne, averaging 23,100 yuan for a gain of 200 yuan. Cast aluminum alloy ingot (A380) prices ranged from 25,500 to 25,700 yuan per tonne, with an average of 25,600 yuan, also up 100 yuan. For grades ZL102 and ZLD104, prices were both quoted from 22,900 to 23,100 yuan per tonne, averaging 23,000 yuan, representing an increase of 200 yuan each.
Market Analysis for Cast Aluminum Alloys
On the macroeconomic front, a relatively dovish stance from a Federal Reserve official, coupled with positive signals from US-Iran negotiations, contributed to a slight weakening of the US dollar and a decline in real interest rate expectations. This marginally improved the attractiveness of non-ferrous metals as an asset class. Investors maintained a cautious posture ahead of the upcoming US non-farm payrolls report, leading to heightened short-term volatility in Shanghai aluminum prices, though overall market sentiment showed slight signs of recovery.
Industry fundamentals continue to find core support from cost factors. Scrap aluminum supply remains tight, while new tax compliance measures have increased operational costs for the sector, keeping scrap prices elevated. A decrease of 1,534 tonnes in warehouse receipts on the Shanghai Futures Exchange, bringing inventory down to 28,000 tonnes, also provided underlying price support. On the demand side, the traditional seasonal lull, compounded by earlier US dollar strength dampening sentiment, has led to a continued decline in operating rates for downstream die-casting enterprises. Purchasing appetite from vehicle manufacturers and parts suppliers remains subdued. May's aluminum alloy output fell 2.9% year-on-year. Orders for traditional hardware, home appliance, and construction-related die-castings are weak. While demand for new energy vehicle body die-casting (for lightweighting) remains stable, the incremental demand is insufficient to offset the seasonal decline, resulting in limited new orders overall.
In the physical market, holders raised their offers in line with futures movements. Downstream buyers were active in the morning session, making necessary purchases, which created a relatively lively trading atmosphere. However, as the cast aluminum futures contract faced some pressure in the afternoon, downstream procurement slowed, and a wait-and-see attitude prevailed, ultimately capping the day's total trading volume.
In summary, cast aluminum alloy prices are moving in tandem with broader aluminum price trends. Demand from the automotive die-casting sector remains relatively stable. The short-term price direction is expected to align with that of primary aluminum. Key factors to monitor include the evolution of Federal Reserve policy expectations and changes in downstream operating rates.
The main contract is anticipated to trade within a range of 22,200 to 23,100 yuan per tonne in the coming session.
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