SMM, August 14:
Today, the SMM A00 spot aluminum price closed at 23,870 yuan/mt, extending its decline by 250 yuan/mt from the previous trading day, while China’s aluminum scrap market broadly followed lower by 200 yuan/mt. In terms of price spreads, on August 14, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,250 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,150 yuan/mt, both widening again WoW. As primary aluminum prices continued to climb, aluminum scrap price fluctuations remained relatively limited, and the price transmission mechanism has been impeded, mainly constrained by two factors. First, downstream secondary aluminum alloy demand has weakened at the margin; as high-temperature holidays have coincided with the traditional consumption off-season, operating rates at cast aluminum alloy enterprises have continued to decline and order volumes have shrunk. Second, high inventories of wrought aluminum alloy scrap raw materials such as doors and windows in Henan and other regions have weakened the upside elasticity of aluminum scrap prices. In addition, on the supply side, reverse invoicing policy constraints persist, and the scarcity of compliant, invoice-bearing aluminum scrap is providing bottom support for aluminum scrap prices. Recently, the import window has improved somewhat from earlier, and traders have become more active in inquiries and purchasing. Cargoes are expected to arrive in batches in mid-to-late August, which should improve import supply in the near term. The current high-temperature holiday has not yet ended; downstream cast aluminum alloy enterprises are maintaining low operating rates, and it will still take time for orders to recover. Scrap utilization enterprises are likely to continue their purchase-as-needed, low-inventory strategy, and any concentrated restocking rally still needs time to materialize. Notably, the price difference between A00 aluminum and shredded aluminum tense scrap has now widened to 1,150 yuan/mt, and the cost advantage of aluminum scrap over primary aluminum has recovered somewhat. In the near term, the aluminum scrap market is expected to continue moving sideways at high levels, with weak end-use demand remaining the core factor suppressing prices.
