High Raw Material Prices Provide Support Alongside Off-Season Inventory Buildup, Secondary Aluminum Price Range Under Pressure [Aluminum Scrap and Secondary Aluminum Weekly Review]

Aluminum Scrap:

This week, China's aluminum scrap market prices consolidated in a narrow range alongside primary aluminum, and the price difference between A00 aluminum and aluminum scrap widened again as aluminum scrap struggled to catch up. On August 13, SMM A00 spot aluminum prices closed at 24,120 yuan/mt, up 320 yuan/mt from last Thursday. In terms of price differences, on August 13, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,310 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,210 yuan/mt, both widening again WoW. Against a backdrop of persistently rising primary aluminum prices, aluminum scrap price fluctuations were relatively limited, and the price transmission mechanism was blocked, mainly constrained by two factors: First, downstream secondary aluminum alloy demand weakened at the margin; with high-temperature holidays combined with the traditional consumption off-season, operating rates at cast aluminum alloy enterprises continued to decline and order volumes shrank. Second, high inventories of wrought aluminum alloy scrap raw materials such as doors and windows in Henan and other regions weakened the elasticity of aluminum scrap price increases. In addition, supply-side constraints from the “reverse invoicing” policy continued, and the scarcity of compliant, invoice-bearing aluminum scrap provided bottom support for aluminum scrap prices. Import side, this week, imported shredded aluminum zorba prices at Ningbo port were lowered from 21,970 yuan/mt to 21,770 yuan/mt (tax-inclusive), while those at Tianjin port declined from 22,020 yuan/mt to 21,820 yuan/mt (tax-inclusive). Recently, the import window improved compared with earlier, traders' inquiries and buying interest increased, and cargoes are expected to arrive gradually in mid-to-late August, which should improve import supply in the short term. At present, high-temperature holidays have not yet ended; downstream cast aluminum alloy enterprises are maintaining low operating rates, and order recovery still needs time. Scrap utilization enterprises are likely to continue their purchase-as-needed, low-inventory strategy, while a concentrated restocking cycle still needs to wait. Notably, the price difference between A00 aluminum and shredded aluminum tense scrap has now widened to 1,210 yuan/mt, and aluminum scrap's cost advantage over primary aluminum has recovered somewhat. In the short term, the aluminum scrap market is expected to continue moving sideways at high levels, with weak end-use demand remaining the core factor weighing on prices.

Secondary Aluminum Alloy:

This week, ADC12 prices rose first and then fell, edging up to 24,400 yuan/mt early in the week, then pulling back to 24,200 yuan/mt in the middle-to-late part of the week. The overall price center was little changed WoW. Cost side, aluminum scrap prices moved sideways overall this week, and production costs changed little. However, aluminum scrap prices remained at relatively high levels, providing support for ADC12 prices and limiting downside room. At the same time, policy uncertainty persisted, compliant aluminum scrap purchases remained restricted, and enterprises still faced high difficulty in procuring raw materials. Demand side, downstream remained in the consumption off-season; some enterprises were on high-temperature holidays or maintained reduced-load production. End-use consumption was weak, market purchases were mainly need-based, and spot transactions were sluggish. Supply side, operating rates among leading secondary aluminum enterprises showed mixed performance this week, edging lower overall and remaining at low levels for the same period. In addition to raw material constraints and weakening demand, high temperatures, typhoons, and heavy rain also disrupted production to some extent, limiting production release. Social inventory showed a phased inflection point, as China's cast aluminum alloy ingot social inventory was 25,500 mt this week, up 1,500 mt WoW, ending ten consecutive weeks of destocking. On one hand, weak off-season demand put warehouse withdrawals under pressure; on the other hand, the spot-futures price spread weakened and futures stayed in contango, so spot-futures arbitrage traders became more willing to buy on dips, shifting some cargoes from the spot market to social inventory. Import side, overseas ADC12 offers rose to $3,090-3,120/mt, and immediate import losses widened again to more than 1,000 yuan/mt, with the import window remaining closed. ADC12 prices are expected to continue moving sideways in the short term. On one hand, elevated compliant raw material prices, low domestic operating rates for the same period, and the closed import window will continue to provide cost and supply-side support for prices, limiting downside room; on the other hand, weak end-use demand during the high-temperature off-season and renewed social inventory buildup mean the spot market lacks demand-driven momentum for sustained price increases. Therefore, any short-term price rise still needs to wait for a substantial improvement in end-use consumption.