Aluminium Scrap Transactions In Huadong Non-ferrous Metals City Kept Falling As Rising Prices Dented Buying Appetite

SHANGHAI, Sep 6 (SMM) –Aluminium prices have been consistently climbing recently, with aluminium scrap prices following suit. However, despite the price increase, has the aluminium scrap market recovered? Has supply improved? Transaction conditions? Latest data shows two consecutive weeks of falling turnover in scrap aluminium at Huadong Non-ferrous Metals City from August 14 to August 27, dropping to 9,600 mt in the fourth week of August, a 14.34% decrease from the first week.

Data shows that aluminium prices plummeted on August 14, but then began to rebound. According to the latest data from SMM, as of August 28, the price of A00 spot aluminium had already reached 18,900 yuan/mt.

With the continuous rise in aluminium prices, aluminium scrap prices have been actively increasing since mid-August. As of August 28, compared to August 14, the price of aluminium extrusion scrap had generally risen by 300-450 yuan/mt, and aluminium tense scrap by 400-550 yuan/mt.

Despite the active upward adjustment in prices, the aluminium scrap market's actual performance isn't as strong. The high raw material cost intensifies the back-and-forth price negotiations in supply chain, making consensus challenging. The tight supply of aluminium scrap, a known fact during the off-peak summer season, coupled with strong demand, keeps it a "scarce commodity," keeping its transaction price consistently high.

But for the primary downstream consumers of aluminium scrap - secondary aluminium alloy companies, the outlook is grim. The market for secondary aluminium alloy companies remains tepid. While secondary aluminium billet companies initially recovered profits from ample orders and price rebounds, the continuous aluminium scrap price rise increased raw material costs, significantly compressing profits. Therefore, downstream scrap-using companies have been cautious in adjusting purchase prices, even pushing for lower prices. Thus, as prices climb, actual market transactions have fallen short of expectations.

Looking ahead, with the end of summer's high temperatures, the supply chain for aluminium scrap is expected to recover in September, likely increasing its supply. However, this will depend on market price fluctuations. As we approach the traditional peak season in the latter part of the year, demand for scrap aluminium will have some support. Yet, with aluminium prices nearing a critical 19,000 yuan/mt, there's a fear of high prices across all downstream operations. Currently, there's a strong wait-and-see sentiment, so the aluminium scrap market is likely to remain stable in the short term.

In conclusion, SMM predicts the throughput of aluminium scrap in Huadong Non-ferrous Metals City to stabilize around 10,000 mt.