First, a review of secondary aluminum alloy prices in July: In July, ADC12 prices overall moved sideways at high levels, starting from 23,700 yuan/mt at the beginning of the month and gradually climbing to around 24,100 yuan/mt in mid-month. Subsequently, constrained by weak demand during the off-season, prices lacked upward momentum and moved sideways in the range of 24,000–24,200 yuan/mt. As of August 6, prices stood at 24,200 yuan/mt, a cumulative increase of 500 yuan/mt from early July. Since July, the price spread between ADC12 and A00 aluminum narrowed continuously. At the beginning of the month, the spread briefly hit a year-to-date high of 1,440 yuan/mt. Subsequently, A00 aluminum prices surged rapidly while ADC12 prices rose only modestly, causing the spread to narrow gradually. By July 31, it had narrowed to 570 yuan/mt.
Cost side, SMM's latest data shows that in July 2026, the theoretical total cost of the ADC12 industry rose 0.4% MoM to 23,518 yuan/mt, with the increase mainly driven by higher aluminum scrap costs. By component, the per-mt aluminum scrap cost increased by 105 yuan MoM to 21,265 yuan, with its share remaining at 90.4%; copper and silicon costs changed relatively little, at 871 yuan/mt and 480 yuan/mt, accounting for 3.7% and 2.0%, respectively.
Tight aluminum scrap supply remained the core factor supporting ADC12 prices in July. Stronger primary aluminum prices drove aluminum scrap prices higher, keeping the price difference between primary metal and scrap low, and the cost of aluminum scrap continued to solidly underpin ADC12 prices. The market had previously focused on the feasibility of using primary aluminum instead of scrap to produce ADC12, but this route is generally uneconomical. The actual cost advantage of primary aluminum is not significant; it is more of a stopgap measure for companies dealing with invoice shortages rather than a proactive, cost-driven substitution. As primary aluminum prices gradually strengthened during the month, the room for substitution narrowed further, and the scale of substitution did not expand significantly.
Demand side, overall orders were moderate in July, but in the latter part of the month, affected by high temperatures, downstream enterprises gradually entering high-temperature holidays, and slower production pace, end-user procurement willingness weakened, leading to a marginal decline in demand. In early August, limited room for demand improvement is expected due to the hot off-season; as high-temperature holidays gradually end later in the month, automotive industry chain enterprises will resume production, and order releases are expected to drive a marginal improvement in demand. However, the pace of the overall recovery will still depend on end-use consumption and OEM production schedules.
Supply side, the operating rate of the secondary aluminum alloy industry was 46.8% in July, up 1.2 ppts MoM and down 6.8 ppts YoY, with enterprises showing mixed performance in their operating rates. Insufficient compliant aluminum scrap and invoice quotas remain the core factors constraining production. Although policies in some regions have shown marginal easing, the limited invoice quotas provide only weak support to operating rates. Given substantial production cuts in May-June, room for further cuts was limited; coupled with improvements in raw materials and orders at some enterprises, the overall operating rate edged up slightly but remained lower YoY. Entering August, secondary aluminum alloy production is expected to hold steady overall, lacking the basis for a significant ramp-up. Some enterprises with better raw material supply or orders may have room for modest output recovery, yet the industry as a whole is expected to mainly operate stably at low levels.
Entering August, ADC12 prices are expected to continue to consolidate at highs. Cost side, the current tight supply of aluminum scrap and high tax compliance costs are unlikely to see significant improvement in the short term, keeping ADC12's bottom support relatively solid. Demand side, the first half of August remains at the tail end of the traditional off-season, with the impact of high temperatures and holidays at some downstream enterprises not yet fully fading, leaving limited room for improvement in end-user orders and lacking a clear demand driver for price rises; however, as the market gradually enters the peak season startup phase in mid-to-late August, orders from end-users such as the automotive sector are expected to see marginal improvement, and the demand side will gradually provide support. Supply side, the industry's low operating rate is unlikely to recover quickly, and the tight supply pattern will continue to underpin prices. Meanwhile, as the price spread between Chinese and overseas markets continues to narrow, imported resources are expected to increase, but the short-term supplementary volume will be limited and is unlikely to significantly alter China's supply-demand pattern. Overall, ADC12 prices in August are expected to continue consolidating at highs, with the trading range seen at 23,700-24,400 yuan/mt. The near-term upside room depends on the strength of demand recovery and aluminum price performance. If peak-season orders are gradually released and supply tightness persists, prices could test further upside; but if demand recovery falls short of expectations, the market will continue to trade in a range supported by costs. Going forward, focus on the recovery of aluminum scrap supply, changes in tax policies, the pace of imported resource inflows, and the start of orders during the September-October peak season.
![Cost Support and Demand Constraints Coexist, ADC12 Consolidates at Highs, Awaiting Peak Season Breakthrough [SMM Analysis]](https://imgqn.smm.cn/usercenter/jWDCu20251217171653.jpg)
