[SMM Cast Aluminum Alloy Morning Comment: Alloy Enterprises Yet to Resume Work, Market Mainly Sluggish] On Tuesday, the SMM ADC12 price was raised by 100 yuan/mt to 23,750 yuan/mt. Post-holiday, futures showed strong performance on the first day, boosting market sentiment, but secondary aluminum enterprises' quotations displayed some divergence. Some enterprises, considering downstream operations have not fully resumed, maintained pre-holiday quotation ranges, holding steady and adopting a wait-and-see approach; others raised prices by 100 yuan/mt accordingly. Inquiry activity in the market gradually recovered, but actual transactions remained relatively light, with the market still dominated by a wait-and-see stance. As the shutdown period for secondary aluminum plants this year was slightly longer YoY, most enterprises are scheduled to resume work between the eighth and fifteenth days of the first lunar month. Supply release pace is expected to be relatively slow in the first week after the holiday, providing phased support to prices. However, demand-side recovery is more likely to be gradual; before end-user orders show significant volume, downstream procurement will remain cautious and need-based. Cost side, continued attention is needed on price fluctuations of aluminum scrap and auxiliary materials such as copper and silicon. Primary aluminum trends remain a key variable affecting market sentiment and the price center. Overall, ADC12 prices are likely to continue the pre-holiday sideways movement pattern in the initial post-holiday period. Subsequent direction will depend on supply-demand matching after full production resumptions and primary aluminum price performance. If phased restocking coincides with primary aluminum holding up well, there is room for price recovery; otherwise, prices may face slight pressure, but the overall trend is expected to remain sideways.

[PV Express] Tongwei Co., Ltd. (600438) announced on February 24 that the company is planning to acquire a 100% equity stake in Lihao Qingneng through the issuance of shares and payment in cash, and to raise supporting funds. This transaction is not expected to result in a change of the company's controlling shareholder or actual controller, does not constitute a connected transaction, and is anticipated not to constitute a major asset restructuring. As the transaction is still in the planning stage and relevant matters remain uncertain, upon the company's application, trading of the company's shares, convertible bonds, and convertible bond conversion will be suspended starting from the market opening on February 25, 2026, with the suspension period expected not to exceed 10 trading days. Lihao was established in April 2021 and is primarily engaged in the R&D, production, and sales of semiconductor materials such as PV-grade high-purity polysilicon and electronic-grade polysilicon. Data shows that Qinghai Lihao currently has a polysilicon capacity of approximately 150,000 mt/year.

[SMM Flash News] According to SMM's supply-demand balance calculations for silicon metal, the silicon balance data from January to May was around +17,000 mt. Looking at specific months, the industry experienced continuous inventory buildup from January to March, but due to reduced supply, the balance shifted to destocking from April to May, resulting in a slight overall inventory buildup. From June to July, both supply and demand for silicon metal are expected to increase, with northern major plants increasing production and output rising in the southwest on the supply side, and silicone sector restarting and increasing production of previously idled capacity on the demand side. However, there is uncertainty regarding the operating rate of polysilicon. Overall, the balance is expected to show inventory buildup from June to July. (Supply includes silicon (Si≥97%) and other types of silicon.)

[Spot Silicon Metal Prices Consolidate, Polysilicon Price Center Weakens]: This week, spot silicon metal prices consolidated. In the spot market, SMM east China oxygen-blown #553 silicon was priced at 8,000-8,300 yuan/mt, unchanged WoW. #441 silicon was priced at 8,400-8,600 yuan/mt, unchanged WoW. #421 silicon was priced at 8,400-9,000 yuan/mt, unchanged WoW. In the futures market, the main silicon metal contract Si2507 fluctuated considerably around 7,300-7,550 yuan/mt. Futures prices rose by approximately 200-300 yuan/mt WoW. After the futures market rose, spot-futures price spread quotes remained stable, with absolute prices increasing WoW. There was a strong sentiment among downstream buyers of silicon metal to drive down prices, and their acceptance of high prices was poor. The availability of low-priced cargoes in the market decreased, and the transaction center for some specifications moved higher WoW.

[Silicon Metal Prices Narrow Decline, Market Trading Sentiment Remains Subdued]: The market price of silicon metal continued to weaken, but the decline narrowed significantly compared to the previous period. In the futures market, the main silicon metal contract fluctuated considerably during the week. The Si2507 contract reached a high of 7,330 yuan/mt and a low of 6,990 yuan/mt during the week. On June 5, the main contract closed at 7,135 yuan/mt, down 80 yuan/mt or 1% WoW, with the decline narrowing. In the spot market, SMM east China oxygen-blown #553 silicon was priced at 8,000-8,300 yuan/mt, down 300 yuan/mt WoW, while #441 silicon was priced at 8,400-8,600 yuan/mt, also down 300 yuan/mt WoW. After the futures market declined, some silicon suppliers gradually followed suit with lower quotes, but most producers, facing significant losses, could not suspend quoting. On Wednesday, the futures market rebounded nearly 3%, but the sentiment in the silicon market remained lackluster, with few downstream users showing a "rush to buy amid continuous price rise" restocking sentiment.

[SMM Weekly Review: Cell Prices Continue to Decline, Polysilicon Prices Remain Stable for Now] This week, the price index for N-type polysilicon was 35.21 yuan/kg. N-type recharging polysilicon was priced at 35-38 yuan/kg, while N-type mixed polysilicon was priced at 31-36 yuan/kg. Overall, polysilicon prices were largely stable. Multiple transactions of polysilicon were recorded before the holiday, with small factories closing deals at 32 yuan/kg and some high-quality mixed polysilicon from large factories closing at 35 yuan/kg. The most-traded contracts of enterprises maintained a quoted price of 36-37 yuan/kg for dense recharging polysilicon. Market transactions were weak after the holiday. A domestic base resumed production this week, attracting market attention. Prices remained stable for now, with the market closely monitoring subsequent supply conditions and the latest wafer transaction status.

[Silicon Metal Main Contract Falls to 7,200 yuan/mt, with Moderate Spot and Futures Market Turnover]: Silicon metal market prices continued to decline, with prices extending their downward trend this week. In the futures market, the lowest point of the silicon metal main contract during the week fell to 7,200 yuan/mt. On May 29, the Si2507 contract closed at 7,215 yuan/mt, down 665 yuan/mt WoW, representing an 8.4% decline. In the spot market, SMM east China oxygen-blown #553 silicon was priced at 8,400-8,500 yuan/mt, down 200 yuan/mt WoW; #441 silicon was priced at 8,700-8,900 yuan/mt, down 250 yuan/mt WoW; and #421 silicon was priced at 8,900-9,300 yuan/mt, down 400 yuan/mt WoW. Silicon metal futures prices fell sharply, and the spot-futures price spread quoted by futures-to-spot traders rose, but the absolute price remained significantly lower than that quoted by silicon enterprises. During the week, downstream buyers and traders predominantly engaged in spot transactions with pricing based on a fixed price.

On May 28, Baowu Magnesium Industry's share price rose. By the close of trading on the 28th, Baowu Magnesium Industry was up 0.35%, closing at 11.46 yuan per share. When asked, "When will the magnesium structural components for ultra-large auto bodies be launched into the market? Are there any ongoing order negotiations and product deliveries for confirmed orders?", Baowu Magnesium Industry stated on its investor interaction platform on May 28 that: The company's magnesium alloy ultra-large integrated auto body structural components have been successfully trial-produced and are undergoing performance testing with customers. According to Baowu Magnesium Industry, on May 23, Wang Qiangmin, Party Secretary and General Manager of Baowu Magnesium Industry, and Wen Faping, Deputy Party Secretary and Vice Chairman, along with their delegation, visited Anhui JAC Group Co., Ltd. for an exchange. Both parties engaged in in-depth cooperation discussions and officially signed a strategic cooperation agreement, jointly pressing the "accelerator" for innovative development in the automotive industry. Both parties will open up broader spaces for the widespread application of magnesium alloy materials in the automotive sector, vigorously promoting the automotive industry's accelerated advancement towards lightweighting and low-carbonization, and forging new brilliance in industry development! When asked about the company's view on the relationship between magnesium and aluminum prices, the record of the institutional survey accepted by Baowu Magnesium Industry, as announced on May 14, indicated: As magnesium prices fall below aluminum prices, it presents a great opportunity for the magnesium industry and is more conducive to expanding downstream applications such as large components in vehicles, integrated die-cast magnesium alloy large components for automobiles, robots, and construction templates, further enhancing downstream customers' enthusiasm for using magnesium. Previously, we promoted magnesium applications from a performance perspective; now, we can promote them even more from a cost perspective. When responding to inquiries about the company's operating performance in 2024, Baowu Magnesium Industry mentioned: In 2024, the company achieved operating revenue of 8,982,563,028.12 yuan, up 17.39% YoY, and net profit attributable to shareholders of the publicly listed firm was 159,628,962.00 yuan, down 47.91% YoY. This was mainly due to the impact of declining magnesium prices, which led to a decrease in the gross profit margin of magnesium materials and die-cast products, resulting in a year-on-year decline in the company's performance. Regarding its business plan for 2025, Baowu Magnesium Industry stated in its 2024 annual report: 1. Fully promote the technological upgrading of primary magnesium smelting (1) Increase innovation in primary magnesium smelting process technologies to continuously reduce magnesium smelting costs. (2) Intensify exploration of green magnesium smelting process technologies and reserve new low-carbon magnesium smelting technologies. 2. Improve the layout of the magnesium industry chain and advance key project construction Improve the layout of the industry chain, optimize the pace of new capacity layout, position the entire process of the industry chain, advance key projects, and effectively reduce costs: (1) Partial commissioning of the Qingyang project, further optimization of the large-tank process to reduce primary magnesium costs; (2) Steadily advance the construction of the Wutai project with an annual output of 100,000 mt of high-performance magnesium-based light alloys and deep processing; (3) Partial completion of the Gansu Baomei Xitie project, further reducing primary magnesium costs through cost control of ferrosilicon. 3. Vigorously promote technological innovation in magnesium applications and advance magnesium market development (1) Achieve further breakthroughs in key magnesium product technologies and expand new demands for magnesium market applications Domestic market: Increase market promotion efforts in domestic automotive, 3C product, construction, and other sectors, establish long-term and stable cooperative relationships with customers, and further expand market share. International Market: Actively participate in internationally renowned exhibitions and industry conferences to showcase the company's technological strength and product advantages, and expand international customer resources. (2) Increase investment in research on magnesium functional materials for future applications, and explore new areas for magnesium-based material applications. 4. Optimize Existing Assets and Enhance Asset Return Levels (1) Strengthen Operations of High-Quality Assets: For high-quality existing assets with strong profitability and good market prospects, increase resource investment to enhance their operational management levels and further improve their income-generating capabilities. (2) Disposal of Idle Assets: Realize the liquidation or appreciation of idle assets such as real estate and equipment through leasing or sales to improve asset utilization efficiency. 5. Optimize Capital Structure and Control Asset-Liability Ratio (1) Reasonably Arrange Financing Scale and Structure: Arrange the proportion of long-term and short-term financing reasonably according to the company's specific circumstances; determine a reasonable financing amount based on the company's debt repayment ability and operational development needs. Reasonably adopt various financing methods, combining direct financing with indirect financing. (2) Strengthen Fund Management and Operational Efficiency: Accelerate the speed of fund collection and turnover to improve the operational efficiency of funds. As Baowu Magnesium Industry stated during an institutional survey, influenced by the decline in magnesium prices, the gross profit margin of magnesium materials and die-casting products decreased, and the company's performance declined YoY. Magnesium prices continued to fall throughout 2024. Taking the price of SMM magnesium ingot 9990 (Fugu, Shenmu) in the main production area of Fugu as an example, the unit price at year-end was 16,000 yuan/mt, compared to 20,250 yuan/mt at the beginning of the year, representing a magnesium price decline of up to 21%. Reviewing the price trend of magnesium alloy AZ91D, it can be seen that the average price of magnesium alloy AZ91D on December 31, 2024, was 17,800 yuan/mt, compared to 22,150 yuan/mt on December 29, 2023. The average price of magnesium alloy AZ91D fell by 4,350 yuan/mt in 2024, a decline of 19.64%. 》Click to view SMM magnesium spot prices 》Subscribe to view historical price trends of SMM metal spot prices Since mid-March, magnesium prices have generally maintained an upward trend until mid-May, supported by a series of factors such as a reversal in the supply-demand pattern, a drop in magnesium ingot producers' inventory to low levels, the deployment of inspection work for bulk industrial solid waste storage sites in multiple regions, environmental protection inspections, and news of dolomite production halts. However, influenced by factors such as insufficient follow-up transactions, strong wait-and-see sentiment among downstream players, and increased demand for fund collection by suppliers at month-end, magnesium prices have recently weakened and declined. According to SMM quotes, on May 28, SMM magnesium alloy AZ91D was quoted at 18,600-18,700 yuan/mt, with an average price of 18,650 yuan/mt, representing a pullback of 50 yuan/mt from the previous trading day. On the 28th, market transactions remained sluggish. SMM learned from a factory salesperson that downstream sentiment was currently strong in wait-and-see mode, with overall weak demand and low psychological price levels in the downstream. Due to magnesium plants maintaining a low operating rate, the inventory pressure on magnesium plants has been relatively small recently. Meanwhile, the overall weak trend in downstream demand has not improved further, resulting in a situation where "small inventory pressure" and "weak downstream demand" are in a state of mutual competition. If downstream demand continues to remain weak, it is expected that the support of low inventory levels in magnesium plants for magnesium prices may weaken.

[SMM Silicon-based PV Morning Meeting Summary: Polysilicon Price Center Declines, Glass Quotations Still Expected to Continue Dropping] Over the weekend, the price of N-type recharging polysilicon was 37-40.5 yuan/kg, and the N-type polysilicon price index was 37 yuan/kg. The price center of the polysilicon market moved downward. Recently, order signing for polysilicon in the early stage has gradually commenced, with order news emerging for both granular polysilicon and rod-shaped polysilicon. Overall, the market's bargaining power is weak.

Last week, polysilicon futures prices showed a rebound trend, closing higher for two consecutive trading days. On May 9, the most-traded PS2506 polysilicon futures contract closed at 38,175 yuan/mt, with a daily increase of 5.7%. Li Xiangying, an analyst at Guosen Futures, believes that the recent rise in polysilicon futures prices is a correction of the previous oversold conditions. "The polysilicon futures prices were previously oversold, falling below the cash cost line of enterprises and trading at a significant discount to spot quotes," Li explained. The spot quote for polysilicon is around 37,000 yuan/mt for mixed-grade material, while the delivery brand for polysilicon futures is higher-quality dense material. Although the supply and demand situation for polysilicon has not improved, there is upward momentum after the oversold prices. "The time period for the market-oriented reform of new energy electricity prices is approaching, and the rapid contraction of end-user order demand has triggered expectations of negative feedback in the industry," said Wang Yanqing, an analyst at China Securities Futures. The fundamental situation of polysilicon remains weak, leading to the previous decline in futures prices below the cash cost line of mainstream enterprises. Therefore, the current futures prices have some correction momentum. From the perspective of the industry's cost curve, Zheng Feifan, an analyst of non-ferrous metals and new materials at CITIC Futures Research Institute, introduced that at the beginning of 2024, the cash cost line for the most advanced 1.5 million mt of capacity in the industry was around 42,000 yuan/mt, mainly from several leading manufacturers. With technological progress and a decline in raw material prices, by the end of 2024, the cash cost line for the most advanced 1.5 million mt of capacity in the industry had fallen to around 38,000 yuan/mt. In 2025, polysilicon production processes are expected to continue to be optimized, with costs potentially falling further, and the cash cost line is expected to drop to 33,000-34,000 yuan/mt. In addition, the registration of polysilicon warrants is still in its early stages, and the quality requirements for delivery brands are high. The deliverable resources in the market are relatively concentrated, with spot and warrant factors supporting near-month prices, resulting in a "backwardation structure" in the futures market. As the delivery time for the PS2506 contract approaches, the market is also watching whether the futures market can alleviate the high inventory pressure in the spot market. According to SMM data, as of the week ending May 9, the social inventory of polysilicon was 257,000 mt, down 1.9% WoW, but still at a high level. "When the absolute price falls below the key level of 35,000 yuan/mt, the market believes it has fallen below the industry's average theoretical cash cost, which may indirectly affect the speed at which spot inventory is transferred to the futures market," said Liu Yixian, an analyst at Hongze Research. Currently, downstream demand for polysilicon is low, and the market is showing an active destocking pattern. From the perspective of the supply-demand gap in the production schedule for "polysilicon-wafers," although polysilicon is currently in a slow destocking phase, inventory levels in the polysilicon segment remain high, with spot cargo still being sold at a volume discount. From a fundamental perspective, domestic polysilicon production remained at a low level of 95,000 mt in April. Zheng Feifan believes that polysilicon companies are currently operating at a loss overall, and supply is expected to remain tight in May. However, the market still has some concerns about production resumptions at major plants during the rainy season. On the demand side, production scheduling for solar cells and modules remained high in March and April, driving a rebound in the operating rate of silicon wafers. However, crystal pulling enterprises mainly focused on digesting inventories, resulting in relatively limited procurement of polysilicon. The PV "installation rush" in May may come to an end. Looking ahead, Li Xiangying stated that the current fundamental situation for polysilicon remains unfavorable, with little improvement expected in the short-term weakness of demand. The trend in spot prices will depend more on supply-side adjustments to the operating rate. "Futures price trends follow changes in supply and demand, as well as cost conditions in the spot market." Li Xiangying believes that, in the absence of significant changes in the supply-demand pattern, polysilicon spot prices are likely to continue fluctuating around the cost line. "From the current market trading logic, polysilicon futures prices may have short-term rebound momentum, with potential expectations for production cuts also providing support to the futures market." Wang Yanqing cautioned that overall polysilicon inventories remain high, and there is significant downward pressure on prices from downstream buyers, leading to sluggish spot transactions. Under the negative feedback from the industry chain, the upside room for polysilicon prices is limited.