[SMM Analysis] tight supply of waste Aluminum in April or continuation of Primary Aluminum consumption in recycled Aluminum Industry will be maintained

Since the Spring Festival, due to the impact of the epidemic, aluminum downstream consumption and recovery have been significantly delayed than normal, and because most of the waste aluminum recyclers are small and scattered self-employed households, the resumption time is at the end of the whole industry chain. At the same time, since March 19, aluminum prices have fallen sharply, the price difference of original waste aluminum has been greatly reduced, and A00 aluminum is widely used in the recycled aluminum industry to supplement the supply of raw materials, which has also made a significant contribution to the sharp reduction in the increase of social aluminum ingot inventory at the end of March.

After entering April, the recovery of waste aluminum supply did not show the expected substantial increase, on the contrary, due to low aluminum prices, some holders still cherish the willingness to sell, waste aluminum supply remains tight. For example, Linyi East China Nonferrous Metals City, one of the largest waste aluminum supply distribution centers in East China, did not resume work until April 1, but the holders remained in a state of cherishing the sale after the start of construction, and there was no large amount of waste aluminum flowing into the market.

At present, there are two main aspects to increase the supply of domestic waste aluminum, one is the emergence of absolute supply of waste aluminum, and the other is the shipper's willingness to ship. In terms of supply, the main sources of waste aluminum, such as construction, transportation, electronic power, and aluminum consumption for household products, have not yet been restored due to the impact of the epidemic, and it will take time to implement investment and consumption stimulus policies in infrastructure, automobile, UHV planning, and so on. Under the influence of the current epidemic, it will also take time for the recovery of traditional catering and service consumption, and it will be difficult to see a significant increase in the supply of domestic waste aluminum in the short term. Taking into account the implementation of the policy and the period of time required for the recovery of aluminum, the supply of domestic waste aluminum has increased significantly or will not appear until the second half of the year. In this context, the sharp decline in aluminum prices makes waste aluminum holders cherish the sale mentality, and can not yet explain the aluminum price makes the psychological recovery slower.

In addition to domestic, the import of waste aluminum, also face two problems. One is the quantity of imported waste aluminum, and the other is the output of foreign waste aluminum. First of all, in terms of approval documents, the trend is that domestic restrictions on the import of solid waste are being carried out in an orderly manner. From the Q1 waste aluminum approval document, the total amount of Q1 waste aluminum approval documents is about 280000 tons. From January to February, only 120000 tons were imported due to the impact of the epidemic situation. At the same time, due to the import of a large number of aluminum alloy ingots to shore, it is estimated that the import amount of waste aluminum in March is difficult to exceed 100000 tons. Then Q1 itself has a large number of approval surplus. Q2 import waste aluminum approval document continues to tighten the possibility. In addition to the issue of approval, due to the gradual increase in the impact of the epidemic situation abroad, the current supply of waste aluminum abroad can be compared with that in China at the beginning of February, both the existing inventory shipments and the amount of waste aluminum produced by new consumption have been significantly reduced, and the recovery time still needs to wait for the overseas epidemic to be brought under control, and the supply of imported waste aluminum is also difficult to recover in the short term.

Finally, from the current price difference of the original waste aluminum, the price difference between the finished aluminum alloy ingot ADC12 and A00 aluminum ingot is still maintained at 1200 yuan / ton, under this price difference, adding part of A00 aluminum to produce ADC12 is still helpful to reduce the cost. In the state of continuous shortage of waste aluminum supply, although the price difference will continue to narrow, but its space is already small, the subsequent high probability is maintained at 900 / 1500 yuan / ton price difference, and the consumption of recycled aluminum industry for raw aluminum does not rebound significantly before the current level is maintained.

Distribution Map of Price difference between ADC12 and A00 Aluminum from 2015 to 2020

Note: the left axis is the absolute price and the right axis is the price difference

(Shanghai Nonferrous Network Yi Liang)