Muted Demand and Rising Stocks Weigh on ADC12 Outlook

Key Highlights

• Futures & Spot: AD2512 futures closed at RMB 20,240/t (▼0.42%); SMM spot steady at RMB 20,900/t with a RMB 515/t basis premium.
• Inventory Build: SHFE warehouse stocks jumped to 54,570 t (+34,204 t WoW), weighing on post-holiday demand prospects.
• Scrap Market: Tight availability in Henan, Jiangxi, and Shandong keeps UBC at RMB 15,550–16,150/t despite slowing purchases.
• Global Signals: Import losses near RMB 400/t deter overseas sourcing; silicon metal supply rising in N. China but SW cuts may add short-term support.

ADC12 Price Snapshot: Futures Dip, Spot Holds Firm

• Futures (AD2512, Most-Traded):
  1. Opened: RMB 20,325/t
  2. High: RMB 20,360/t
  3. Closed: RMB 20,240/t (▼85/t, −0.42%)
  4. Trading Volume: 1,110 lots | Open Interest: 11,888 lots → short-side pressure observed.
   
• Spot Market:
  1. SMM ADC12: RMB 20,900/t (flat WoW, steady pre-holiday).
  2. Basis Premium: RMB 515/t vs futures.
   
• Primary Aluminum (A00): RMB 20,770/t (flat DoD).
   
• Scrap (ex-tax):
  1. Baled UBC: RMB 15,550–16,150/t
  2. Shredded tense scrap: RMB 17,300–17,800/t
  3. Wheel hub/mechanical casting scrap: flat WoW.
   
• Overseas ADC12 Offers:
  1. Overseas: USD 2,530–2,560/t
  2. China Domestic: RMB 20,000–20,300/t
  3. Thailand Local (ex-tax): THB 81–82/kg
  4. Import losses widened to ~RMB 400/t.
   
• Silicon Metal (Feedstock):
  1. #553 oxygen-blown: RMB 9,400–9,600/t
  2. #441: RMB 9,600–9,800/t

Demand–Supply Trends: Holiday Slowdown and Inventory Surge

• Demand:
  1. Pre-holiday stocking supported short-term demand but is nearly complete.
  2. Extended downstream holidays (3–8 days, longer than last year) limit consumption.
  3. Die-caster demand remains muted, awaiting post-holiday restart.
   
• Supply:
  1. Scrap supply tightness persists in Henan, Jiangxi, and Shandong, providing a cost floor.
  2. Inventories are building:
  3. Registered Warrants: 22,560t (+3,379t DoD).
  4. SHFE Warehouse Inventory: 54,570t (+34,204t WoW).
  5. Secondary Alloy Ingots (social): 50,050t (+382t WoW).
  6. Silicon metal supply increasing in N. China, though SW producers plan cuts by late Oct.

Scrap & Feedstock: Tight Supply vs. Silicon Output Growth

• Inventories: Rapid accumulation across warehouses and social stocks → could weigh on post-holiday demand recovery.
• Scrap Market: Prices supported by tight availability and tax policy uncertainty. Pre-holiday stockpiling gave temporary lift but is tapering.
• International Market: Import losses widen, discouraging overseas sourcing. Thailand ADC12 prices steady.
• Feedstock (Silicon Metal): Prices supported short term by rising N. China supply and expected SW production cuts.

Market Outlook: Range-Bound Prices Amid Post-Holiday Uncertainty

• ADC12 Prices: Likely range-bound at RMB 20,800–21,000/t near term.
• Scrap: Tightness supports high levels (UBC: RMB 15,600–16,100/t; tense scrap: RMB 17,300–17,800/t), but upside limited once stockpiling ends.

Key Watchpoints: Tax policy clarity, pace of inventory buildup, and demand recovery post-holiday from die-casters.