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Secondary Aluminum Raw Materials:
This week, the domestic primary aluminum spot market saw a significant retreat, with aluminum prices falling below the 20,000 yuan threshold. Aluminum scrap prices mainly followed the downward trend of aluminum prices. Suppliers of aluminum scrap showed insufficient willingness to sell at low prices, and the price difference between primary metal and scrap fluctuated rangebound. Regarding aluminum scrap imports, as aluminum prices remained in a state where LME outperforms SHFE, overseas aluminum scrap prices lacked competitiveness. Additionally, after the implementation of new import regulations, import volumes showed no significant changes, mainly due to ongoing exploration in customs clearance and downstream demand markets. Therefore, in the short term, aluminum scrap supply is unlikely to see significant changes. As of this Thursday, the SMM A00 spot price was 19,680 yuan/mt, down 740 yuan/mt from last Thursday. The Shanghai aluminum tense scrap price was 18,038 yuan/mt (excluding tax), unchanged from last Thursday. The price difference between primary metal and aluminum tense scrap in Shanghai narrowed by 630 yuan/mt from last Thursday to 1,752 yuan/mt. The price difference between primary metal and aluminum extrusion scrap in Foshan fell by 184 yuan/mt from last Thursday to 1,614 yuan/mt. In the short term, domestic aluminum scrap supply remains tight with little improvement expected, and the price difference between primary metal and scrap is likely to narrow further.
Secondary Aluminum Alloy:
Since last Friday, aluminum prices have continued to decline, with a cumulative drop of 740 yuan/mt over five days, while secondary aluminum alloy prices only slightly decreased by 100 yuan/mt. Today, the SMM ADC12 price fell to 19,680 yuan/mt. On the cost side, the tight circulation of aluminum scrap has not eased, and secondary aluminum plants actively purchased to meet order delivery needs. Additionally, considering that aluminum scrap traders may gradually halt operations after the New Year, secondary aluminum enterprises have started to stockpile raw materials in advance to ensure production during and after the Chinese New Year, especially to secure the supply of liquid aluminum for long-term contracts. However, due to insufficient market supply and the continued decline in aluminum prices, aluminum scrap traders held back cargoes, making procurement more challenging for secondary aluminum plants. This week, the costs of raw materials such as aluminum scrap, silicon, and copper for ADC12 all declined, but the decrease in aluminum scrap costs, which accounts for the largest proportion, was relatively small, making the cost side the primary factor supporting ADC12 prices. On the demand side, supported by automakers' push for annual targets at year-end, demand from secondary aluminum plants, especially large ones, remained relatively stable, with some even seeing an increase in orders. However, due to raw material shortages, manufacturers were cautious in taking orders. Downstream maintained just-in-time procurement, with few engaging in restocking. On the supply side, the operating rate of the secondary aluminum industry is expected to weaken slightly this week, mainly due to raw material shortages and environmental protection-related controls in regions such as Henan, where several secondary aluminum enterprises experienced full-week production halts with no confirmed resumption dates. Regarding imports, current overseas ADC12 prices are concentrated in the range of $2,420-2,460/mt, while port spot cargoes are quoted at 19,600-19,800 yuan/mt, with immediate losses per ton on imports around 600 yuan. Overall, in the short term, costs strongly support secondary aluminum alloy prices, leaving limited downside room for ADC12 prices, which are expected to fluctuate rangebound with aluminum prices.
