Tax compliance underpins raw material costs, aluminum scrap prices remain stable 【Aluminum Scrap Daily Review】

SMM, September 24:

Today, SMM A00 aluminum prices closed at 24,240 yuan/mt, flat MoM from the previous trading day, with the aluminum scrap market also holding steady. In terms of price spreads, on September 24, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan stood at about 2,482 yuan/mt, while the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,261 yuan/mt. On the import side, aluminum scrap imports in August totaled 142,000 mt, up 18.60% MoM but down 17.67% YoY, ending a four-month decline since April. Cumulative imports from January to August reached about 1.243 million mt, down about 7.5% YoY. The MoM recovery in August was mainly driven by the resumption of shipping schedules and replenishment from Southeast Asian sources. Supply side, tax audits in Henan, Hunan, and other regions continued to intensify and expand, further tightening the scarcity of compliant, invoiced aluminum scrap, providing strong support for prices. Meanwhile, sales channels for non-invoiced cargo narrowed under compliance pressure, forcing some traders to cut prices to move inventory, keeping prices under persistent downward pressure. Demand side, the cast aluminum alloy "September peak season" fell short of expectations, with demand yet to see a substantial increase. Demand for wrought aluminum alloy remained moderate, and in-factory aluminum scrap inventories were relatively ample.

Next week, the aluminum scrap market is expected to consolidate on a strong note, with mainstream shredded aluminum tense scrap (priced based on aluminum content) likely to trade in the range of 20,500-21,200 yuan/mt. Close attention should be paid to the scope of tax audit expansion and downstream stockpiling ahead of the National Day holiday.