Downstream Buyers Reluctant to Stock up before Holiday, and Transactions of Aluminium Scrap Declined

SHANGHAI, Sep 30 (SMM) - As of September 30, aluminium prices fell 370 yuan/mt or 2.0% from a week ago to 18,340 yuan/mt. The average prices of aluminium extrusion scrap and aluminium tense scrap follow suit by dropping 300-400 yuan/mt and 200-300 yuan/mt respectively. In terms of aluminium scrap supply, due to the dramatic decline in aluminium prices this week, upstream retail investors rushed to sell in order to avoid excessive losses, so the supply of scrap aluminium increased significantly during the week. In terms of aluminium scrap demand, SHFE Aluminium fell under the pressure of falling LME aluminium and surging the US dollar index. Despite the upcoming National Day holiday, downstream manufacturers were not optimistic about the follow-up trend in aluminium prices and had no intention to stock up before the holiday, hence the demand for aluminium scrap declined during the week.  On the whole, the upstream and downstream enterprises in the aluminium scrap market responded differently to the falling aluminium prices. The upstream retail investors were bearish and dumped their cargoes in order to increase cash flows, while the downstream enterprises continued to reduce or even suspend the purchases of aluminium scrap. It is because most traders are still operating normally during the National Day holiday, so downstream enterprises can purchase aluminium scrap immediately if they need any during the holiday. Therefore, no pre-holiday stocking among downstream buyers further intensified the oversupply of aluminium scrap.