The price difference between ADC12 and A00 is greatly enlarged, but it is difficult for waste aluminum to appear [SMM analysis]

SMM10 March 29: this week by the collapse in coal prices and social aluminum ingot inventory impact, aluminum prices fell about 1700 yuan / ton, recycled aluminum ADC12 prices due to the decline in waste aluminum prices lagged behind and weakened liquidity, low aluminum prices to ADC12 transmission is slow, the domestic mainstream ADC12 prices fell more slowly than A00 aluminum, ADC12 and A00 aluminum price gap opened, once appeared recycled aluminum enterprises accounting for the use of A00 aluminum to produce recycled aluminum ADC12. SMM believes that although the price difference is reached, it is difficult to produce the original aluminum waste due to the influence of high copper and silicon price, low import ingot impact, poor downstream demand and other factors. The specific analysis is as follows:

图1：原铝ADC12加工成本
     

The author has put forward two conditions for the original aluminum to replace waste aluminum, one is that it is profitable to use A00 aluminum to produce ADC12, and the other is the serious lack of circulation of waste aluminum raw materials. The aluminum price continues to fall rapidly, which seems to meet the above two conditions, but in fact, the sharp rise in silicon prices, the impact of low-price import ingots, poor downstream demand and other factors are not the same as before.

First of all, the price of silicon has risen sharply since July. Even with the relatively poor grade of unventilated silicon, the processing cost of adding primary aluminum to produce ADC12 aluminum alloy ingots was once as high as 4400 yuan / ton, which is much higher than the processing cost of 1200 yuan / ton in previous years. Even if the silicon price continues to fall recently, it is still high, and the price gap between the mainstream ADC12 and the A00 aluminum barely meets the replacement requirements on Thursday, and the expansion of profit margins still requires the price of aluminum and silicon to continue to fall.

Figure 2: price of commonly used silicon in recycled aluminum

Secondly, a large number of low-cost imported aluminum alloy ingots continue to flow into China in recent months. After the recent sharp drop in aluminum prices, early value plate aluminum alloy ingots quickly enter the market at a low price, which makes, on the one hand, low-price compound ingots replace waste aluminum as raw materials to accelerate the decline in the cost of ADC12 aluminum alloy ingots, on the other hand, low-price finished products ADC12 also suppresses the price of recycled aluminum market. Therefore, even the mainstream auto parts market, which is not directly impacted by imported ingots, can supplement certain low-cost compound ingot raw materials.

Finally, this year's traditional consumption season is not prosperous, the downstream is restricted by the lack of car chips, the impact of power production restrictions on aluminum alloy ingots demand is not good, the recent sharp drop in aluminum prices also maintained a strong wait-and-see mood.

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