Secondary Aluminum Raw Materials: The domestic aluminum scrap market fluctuated in tandem with primary aluminum this week, with the price center hovering at highs. As of December 18, the SMM A00 aluminum price closed at 21,730 yuan/mt, down 160 yuan/mt WoW. Major categories of aluminum scrap followed the adjustment, with shredded aluminum tense scrap (including freight) quoted at 18,000-18,550 yuan/mt (ex-tax) and baled UBC at 16,250-16,750 yuan/mt (ex-tax). On one hand, some secondary aluminum alloy scrap utilization enterprises reported that they are expected to begin Chinese New Year stockpiling soon and are currently conducting concentrated procurement of aluminum scrap raw materials, thus accelerating the procurement pace for aluminum tense scrap. However, repeated environmental protection-driven production restrictions in regions such as Chongqing, Henan, and Hebei affected the operating rates of scrap utilization enterprises, leading to a slight weakening in downstream aluminum scrap demand. On the other hand, imported and domestic aluminum scrap raw materials remained tight, traders maintained low inventory levels, and the slight dip in aluminum prices at the beginning of the week prompted some aluminum scrap suppliers to hold prices firm and be reluctant to sell. Downstream alloy enterprises reported difficulty in sourcing low-priced raw materials. Regarding the price difference between primary metal and scrap, the price difference between A00 aluminum and shredded aluminum tense scrap closed at 1,924 yuan/mt on December 18, while the price difference for bare bright aluminum wire in Jiangsu was 901.9 yuan/mt. The aluminum scrap market is expected to continue fluctuating at highs next week, with the mainstream range for shredded aluminum tense scrap (including freight) projected at 18,000-18,500 yuan/mt (ex-tax). The tight supply situation for aluminum scrap is difficult to change in the short term, and shortages of imported raw materials are providing a floor for prices. Pre-Chinese New Year stockpiling is about to begin, with concentrated raw material procurement by some scrap utilization enterprises offering some support for scrap demand. However, repeated environmental protection-driven production restrictions in central and south-west China mean market participants remain cautious. Overall, the tug-of-war between sellers and buyers in the aluminum scrap market is expected to continue next week. Close attention should be paid to fluctuations in primary aluminum prices, the implementation of environmental protection-driven production restrictions, and changes in the procurement pace of downstream enterprises, while remaining vigilant against the risk of a high-level correction.
Secondary Aluminum Alloy: The secondary aluminum alloy market generally maintained a pattern of high volatility this week. In the futures market, the most-traded cast aluminum alloy contract first declined then rose, mainly fluctuating around the 21,000 yuan/mt level during the week. In the spot market, as of today, the SMM ADC12 price was quoted at 21,650 yuan/mt, cumulatively down 100 yuan/mt from last Friday. Cost is the core support for the current ADC12 price. Although the A00 aluminum price showed volatile movements, first declining then rising during the week, aluminum scrap prices demonstrated significant resistance to decline due to persistently tight supply: traders held prices firm and were reluctant to sell when aluminum prices fell, but quickly followed price increases during rebounds. This kept production costs for secondary aluminum plants persistently high, thereby supporting the firm ADC12 price. The theoretical profit/loss for the ADC12 industry has now rebounded above the break-even line, with profitability improving compared to the previous period. On the demand side, new orders from downstream die-casting enterprises showed weakness. Although there is some year-end demand for periodic volume pushes, signs of an overall demand slowdown are gradually becoming apparent. Coupled with sharp fluctuations in aluminum prices, downstream procurement has become more cautious, mostly purchasing as needed, leading to generally average overall market transactions. Supply side, the operating rate of leading enterprises in the secondary aluminum industry remained stable at 59.8% this week, with orders and production at large plants remaining relatively stable. However, environmental protection-related controls were reinstated in Chongqing, suppressing the recovery of local enterprises' operating rates. Inventory side, according to SMM statistics, the social inventory of secondary aluminum alloy ingots in mainstream domestic consumption areas was 53,400 mt on December 18, a decrease of 1,256 mt from last Thursday, continuing a slight destocking trend. ADC12 prices are expected to continue fluctuating at high levels in the short term, with limited room for both increases and decreases. Support below comes from the rigid cost floor provided by tight aluminum scrap supply, while pressure above stems from marginally weakening demand and the wait-and-see sentiment among downstream players triggered by aluminum price volatility. Subsequent attention should focus on raw material availability, regional environmental protection policies, and changes in downstream orders.
(Data Source Statement: Except for publicly available information, other data are processed by SMM based on public information, market communication, and relying on SMM's internal database model, for reference only and do not constitute decision-making advice.)
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