This week, aluminum scrap market prices in China fluctuated upward following primary aluminum prices. Aluminum prices surged twice during the week, while the aluminum scrap market adopted a wait-and-see attitude with cautious and steady upward adjustments. As of April 16, the SMM A00 aluminum price closed at 25,100 yuan/mt, up 700 yuan/mt WoW from Thursday. Shredded aluminum tense scrap (delivered price) traded in a mainstream range of 21,100-21,400 yuan/mt (tax exclusive). Imported shredded aluminum slices (Ningbo Port) operated in a range of 21,720-22,020 yuan/mt (tax inclusive). In terms of the price difference between primary metal and scrap, on April 16, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was recorded at 3,148 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 1,965 yuan/mt. Supply side, regulatory enforcement of the "reverse invoicing" policy continued to tighten, compliance costs in the aluminum scrap recycling process remained elevated, and actually available invoiced sources remained tight. Yards held prices firm with strong hold-back-from-selling sentiment, and traders in some regions adopted a wait-and-see approach on high-priced sources with locked volumes, resulting in low actual market circulation. Demand side, the peak season demand during the "Golden March and Silver April" period was lackluster. Downstream aluminum tense scrap-based scrap utilization enterprises continued to maintain strategies of purchasing as needed and operating with low inventory, with limited willingness to accept high-priced resources, and the overall procurement pace remained conservative. Wrought aluminum-based enterprises were in their production peak season with relatively higher stockpiling enthusiasm, but their support for prices remained limited. Next week, the aluminum scrap market is expected to continue holding up well at elevated levels, with shredded aluminum tense scrap (delivered price) expected to trade in a mainstream range of 21,000-21,500 (tax exclusive). Supply-side policy constraints are unlikely to ease in the short term, and the tight pattern of compliant sources is expected to persist. The Strait of Hormuz transit risks triggered by the US-Iran conflict have not fully subsided, and elevated aluminum prices along with yard hold-back-from-selling sentiment are providing floor support for prices. However, demand-side peak season recovery fell below expectations, with downstream scrap utilization enterprises generally maintaining low inventory and purchasing-as-needed strategies, and high prices suppressed overall transactions. In the short term, continued attention should be paid to the actual impact of the US-Iran conflict on aluminum price fluctuations and expectations for end-user order recovery, with vigilance against the risk of aluminum prices retreating after rapid rise.
The price center of secondary aluminum alloy shifted slightly upward this week, but upside room remained limited. As of Thursday, the SMM ADC12 price rose 300 yuan/mt WoW from Thursday, with the inversion range against A00 aluminum prices widening further. Overall, upward momentum on the cost side was offset by persistently weak demand, and prices mainly moved sideways. Cost side, primary aluminum prices held up well this week, pushing up enterprise production costs and prompting producers to raise their quotes accordingly. However, the price increase of finished ingots was weaker than that of aluminum scrap, and enterprise profit margins continued to narrow throughout the week. Demand side, weak demand remained the primary factor constraining price rises. Currently, downstream enterprises generally maintained just-needed restocking, with low willingness to accept high-priced supplies. Trading volume showed no significant improvement during the week, and market trading sentiment remained subdued. Enterprises reported that new orders remained insufficient, and the pace of end-use consumption recovery continued to fall below expectations. Supply side, the operating rate of leading enterprises edged down 0.2 percentage points WoW to 59.2% this week. Affected by weakening demand, enterprise shipment pace slowed down somewhat, and market price competition remained fierce. The supply side had not yet shown significant contraction overall, providing limited support to prices. Inventory side, according to SMM statistics, as of Thursday, social inventory of secondary aluminum alloy ingots in major consumption areas in China increased by 1,100 mt WoW from Thursday to 47,500 mt, marking the first inventory buildup since February. This round of inventory rebound was mainly attributable to a significant narrowing of the spot-futures price spread, which squeezed arbitrage room for spot-futures traders and hindered their shipments. Combined with recent marginal weakening in demand, enterprise inventory began to shift to social inventory. The market currently remained in a supply-demand dual-weak pattern. In the short term, ADC12 prices are expected to maintain a fluctuating trend within a range. Although the cost side provides some support to prices, the slow recovery on the demand side will continue to suppress price elasticity. Going forward, close attention should be paid to the sustainability of primary aluminum price trends and improvement in downstream orders. If the demand side fails to pick up, the possibility of prices coming under pressure and pulling back again cannot be ruled out.
