Secondary aluminium alloy export prices to go up on tightened supply

SHANGHAI, May 14 (SMM) – China’s secondary aluminium exports prices are likely to rise further in the short term as the month-long operation suspension of China Certification and Inspection Group (CCIC) at North America in May would significantly slash aluminium scrap imports from the US and shrink secondary aluminium exports as a result, SMM believes.

The authority began to impose broad-based inspections on all scrap materials imported from the US from May 4 and put CCIC’s operations at North America under A-level risk alert for one month. This in effect means China would not be able to import scrap from the US due to a lack of CCIC certificate for one month.

SMM estimated that about 50,000 mt of aluminium scrap imports would be affected by this move in May.

Aluminium scrap imports account for the majority of raw materials for China’s secondary aluminium exports as such exports could avoid China’s 15% tariffs for aluminium exports as well as the 25% tariff on aluminium scrap imported from the US.

Most secondary aluminium exporters took a watch-and-wait approach and turned cautious at taking export orders despite an alternative of adopting the certificate issued by CCIC Hongkong. SMM estimated that close to 70% of export orders would be cut.

The tightened secondary aluminium export supply drove the prices for ADC12 exported to Japan up to $2,070/mt fob as of Friday May 11, from $1,950/mt a week ago.

Given the uncertain trade conditions between China and the US, we expect the prices of secondary aluminium exports to go up further.

However, prices of secondary aluminium for the domestic market saw little imptact due to the sluggish downstream vehicle consumption.

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