The Recovery of the Secondary Aluminum Market Accelerates, ADC12 Prices Fluctuate Upward [Weekly Review of Aluminum Scrap and Secondary Aluminum]

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Secondary Aluminum Raw Materials:

After the Chinese New Year holiday, the aluminum industry gradually resumed operations across the upstream and downstream sectors. The aluminum scrap industry, however, resumed relatively later. This week, especially after the Lantern Festival, the pace of resumption in the aluminum scrap sector accelerated, and market activity slightly improved. In terms of prices, primary aluminum prices fluctuated at highs during the period, with the price center moving upward and the price difference between primary metal and scrap widening. Supply side, aluminum processing enterprises gradually resumed operations after the holiday, and aluminum scrap supply is expected to recover. For overseas aluminum scrap supply, some traders reported an improvement in shipments. However, considering the significant price spread between domestic and overseas markets, overseas aluminum scrap lacks a price advantage, and the volume increase remains limited. Therefore, short-term aluminum scrap supply has only slightly improved. As of this Thursday, the SMM A00 spot price was reported at 20,510 yuan/mt, up 280 yuan/mt WoW. The Shanghai aluminum tense scrap price was 18,635 yuan/mt, up 271 yuan/mt WoW. The price difference between A00 aluminum and aluminum tense scrap in Shanghai expanded by 9 yuan/mt on the last trading day before the holiday to 1,875 yuan/mt, while the price difference between A00 aluminum and aluminum extrusion scrap in Foshan widened by 107 yuan/mt to 2,248 yuan/mt on the same day. In the short term, domestic aluminum scrap supply and demand are gradually recovering, and the price difference between primary metal and scrap is expected to fluctuate within a narrow range. Continuous monitoring of changes in domestic and overseas aluminum scrap supply is required.

Secondary Aluminum Alloy:

This week, the domestic secondary aluminum alloy market continued its post-holiday recovery trend. Driven by cost support and demand recovery, secondary aluminum prices saw a slight upward shift in the price center compared to last week. As of February 13, the SMM ADC12 price increased by 100 yuan/mt WoW to 21,300 yuan/mt. In the import market, overseas ADC12 prices remained stable within the range of $2,420-2,460/mt. The slight improvement in the RMB exchange rate marginally enhanced the profitability of spot imports, but the supply of imported goods remained limited. As the pace of resumption in upstream and downstream enterprises accelerated after the holiday, trading activity in the secondary aluminum market increased daily. Supply side, the operating rate of large secondary aluminum plants gradually rebounded to pre-holiday normal levels this week, while small and medium-sized plants mostly resumed production mid-week, after the Lantern Festival. Raw material procurement demand also gradually recovered, with aluminum scrap prices actively following the rise in primary aluminum prices, strengthening cost-side support. Demand side, downstream die-casting enterprises saw a mild recovery in orders, with some enterprises showing restocking demand after consuming pre-holiday stockpiles. However, the market has not fully recovered, and post-holiday prices remain high, leading to just-in-time procurement as the primary approach. In the short term, ADC12 prices are likely to continue fluctuating upward. High primary aluminum prices, coupled with limited import supply and seasonal demand recovery, are expected to support secondary aluminum alloy prices. If aluminum prices remain at high levels, the price center of ADC12 may further move upward.