[SMM Analysis] Southeast Asia Aluminum Scrap Rebounds as ADC12 Stays Under Pressure Amid Section 232 Focus

Southeast Asian Aluminum Scrap Prices Rebound

The Southeast Asian aluminum scrap market recovered this week. SMM assessments showed Malaysia Tense rising by USD 100/mt to USD 2,700/mt, Talon increasing by MYR 500/mt to MYR 14,250/mt, and UBC climbing MYR 325/mt to MYR 9,950/mt. In Thailand, Talon and UBC increased to THB 110,000/mt and THB 82,000/mt, respectively.

Market participants noted that although LME aluminum prices declined during the week, most suppliers maintained stable quotations rather than following the futures market lower. Limited scrap availability and reduced willingness to sell at lower prices continued to provide support for regional scrap prices.

Trading activity improved slightly compared with previous weeks, but transactions remained largely driven by immediate procurement needs. Overall demand has yet to show a meaningful recovery, leaving market participants cautious about the near-term outlook.

ADC12 Weakens Further as Raw Material and Alloy Markets Diverge

In contrast to the strength seen in scrap prices, the Southeast Asian ADC12 market remained under pressure.

Malaysia's domestic ADC12 price declined from MYR 12.85/kg to MYR 12.65/kg, while the FOB Malaysia assessment fell from USD 3,120/mt to USD 3,100/mt. Thailand's domestic ADC12 price also edged down from THB 104.5/kg to THB 104/kg.

Most producers kept quotations unchanged, although some adjusted offers to around USD 3,060/mt and THB 103.5/kg to better reflect current transaction levels. Market participants reported that downstream demand had improved only marginally, with new orders remaining limited and purchasing mainly based on immediate production requirements.

Meanwhile, trading activity in the Indian market also slowed compared with previous weeks. Although spot transactions were still reported, buyers remained highly price-sensitive and continued to favor more competitive offers.

The divergence between rising scrap prices and weaker ADC12 prices became more evident this week, suggesting that downstream demand is recovering more slowly than raw material costs, further squeezing margins for secondary aluminum producers.

Section 232 Policy Draws Market Attention

Beyond price movements, overseas market participants increasingly focused on the latest developments surrounding the US Section 232 policy.

According to market feedback, many industry participants are closely monitoring whether future policy changes could further strengthen domestic scrap retention in the United States. If exports of high-quality aluminum scrap are reduced, Asian markets could face tighter scrap availability, potentially providing support for regional scrap prices.

However, the policy outlook remains uncertain, and no significant changes in global trade flows have been observed so far. Market participants will continue to monitor policy developments and implementation details closely.

Outlook

The Southeast Asian secondary aluminum market showed a clear divergence this week, with aluminum scrap prices rebounding while ADC12 prices remained under pressure. Tight raw material supply continued to support scrap prices, whereas weak downstream demand limited any recovery in secondary alloy prices.

Looking ahead, market attention is expected to focus increasingly on policy developments rather than short-term price fluctuations. The implementation of the US Section 232 policy, together with the pace of downstream demand recovery, will remain key factors influencing the regional secondary aluminum market in the coming weeks. Short-term prices are expected to remain range-bound amid cautious market sentiment.