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Secondary Aluminum Raw Materials:
This week, domestic primary aluminum spot prices continued to fluctuate rangebound between 19,630-19,670 yuan/mt. The aluminum scrap market remained stable, with the price difference between primary metal and scrap fluctuating rangebound during the week. Currently, aluminum scrap circulation remains tight. Considering that aluminum scrap traders typically enter the Chinese New Year holiday earlier than downstream enterprises, downstream scrap utilization enterprises actively stocked up raw materials, providing some support for aluminum scrap prices. In the short term, the price difference between primary metal and scrap is expected to fluctuate rangebound. Additionally, many regions fully implemented the reverse invoicing policy starting January 1, reigniting market sentiment of wait-and-see in the aluminum scrap market. Coupled with the continued tight supply of aluminum scrap, the substitution of primary aluminum for aluminum scrap has become increasingly evident under the current price difference, supporting aluminum ingot destocking. Regarding aluminum scrap imports during the week, the price trend of LME outperforms SHFE for primary aluminum remained unchanged, leaving overseas aluminum scrap prices uncompetitive. Combined with many companies halting shipments at year-end, the short-term aluminum scrap supply is unlikely to see significant changes. As of this Thursday, the SMM A00 spot price was 19,670 yuan/mt, down 200 yuan/mt from last Thursday. The Shanghai aluminum tense scrap price was 17,848 yuan/mt (excluding tax), down 136 yuan/mt from last Thursday. The price difference between A00 aluminum and Shanghai aluminum tense scrap narrowed by 64 yuan/mt from last Thursday to 1,822 yuan/mt. The price difference between A00 aluminum and Foshan aluminum extrusion scrap narrowed by 15 yuan/mt from last Thursday to 1,591 yuan/mt. In the short term, the tight domestic aluminum scrap supply is expected to persist, and the price difference between primary metal and scrap will likely fluctuate rangebound.
Secondary Aluminum Alloy:
This week, the price center of secondary aluminum alloy slightly declined. As of January 9, the SMM ADC12 price fell by 100 yuan/mt from last Thursday to 20,800 yuan/mt. On the cost side, aluminum scrap prices mainly followed aluminum prices downward during the week. However, due to tight supply, the decline in aluminum scrap prices was relatively moderate, and the price difference between primary metal and scrap continued to narrow. Currently, secondary aluminum manufacturers face the risk of material shortages, and raw material stocking before the Chinese New Year remains less than ideal. Silicon prices also continued to decline, with the price of above-standard #553 silicon metal falling by 100 yuan/mt during the week to 11,100 yuan/mt. In the short term, secondary aluminum plants face relatively low cost pressure from silicon. On the demand side, orders showed slight divergence after January. Some enterprises reported that orders remained full, and they continued actively delivering orders while cautiously taking orders due to concerns over raw material and inventory shortages. Meanwhile, other enterprises indicated that, as downstream enterprises completed their year-end push for annual targets, some first-quarter orders were fulfilled by the end of last year, leading to a decline in order volumes after January. On the supply side, raw material shortages and regional environmental protection inspections remain the main factors affecting the operating rate of the secondary aluminum industry. Additionally, some northern enterprises have started their holidays early due to cold weather, with most manufacturers expected to enter the Chinese New Year holiday after January 22. Regarding imports, the current overseas price of imported ADC12 remains in the range of $2,430-2,460/mt. The continued rebound of the RMB exchange rate during the week led to a slight expansion of immediate losses per ton for imported ADC12, by approximately 500 yuan. Overall, the market currently faces tight supply, coupled with raw material shortages, and ADC12 prices are expected to remain firm in the short term.
