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Secondary Aluminum Raw Materials:
This week, domestic primary aluminum spot prices remained above 20,000 yuan/mt, fluctuating at highs. Spot discounts in east China continued to narrow, while the price difference between primary metal and scrap widened during the week. The aluminum scrap market has largely entered the holiday period, with trading activity weakening and only a few major manufacturers still making purchases. Additionally, in terms of overseas aluminum scrap supply, the price trend of LME outperforms SHFE for primary aluminum remained unchanged, making overseas aluminum scrap prices less competitive. Coupled with many companies halting shipments at year-end, short-term aluminum scrap supply is unlikely to see significant changes. As of this Thursday, SMM A00 spot price was reported at 20,200 yuan/mt, flat WoW; Shanghai aluminum tense scrap price was 18,282 yuan/mt, down 109 yuan/mt WoW; the price difference between primary metal and aluminum tense scrap in Shanghai widened by 329 yuan/mt WoW to 1,918 yuan/mt; the price difference between A00 aluminum and aluminum extrusion scrap in Foshan widened by 160 yuan/mt WoW to 2,081 yuan/mt. In the short term, with tight domestic aluminum scrap supply and suppliers entering the holiday period, while downstream secondary aluminum processing enterprises are in the off-season, aluminum scrap supply and demand are both weak. The price difference between primary metal and scrap is expected to fluctuate rangebound.
Secondary Aluminum Alloy:
This week, secondary aluminum alloy prices remained stable at 21,100 yuan/mt. This was the last trading week before the Chinese New Year holiday, with both upstream and downstream secondary aluminum markets largely entering the holiday period. Aluminum scrap traders reduced shipments, and secondary aluminum plants gradually stopped taking orders, focusing on fulfilling existing orders. Meanwhile, with downstream enterprises halting production and completing pre-holiday stockpiling, market transactions became increasingly sluggish during the week. On the production side, affected by the Chinese New Year holiday, the industry's operating rate dropped significantly this week. According to SMM, 14% of enterprises (mainly small and medium-sized enterprises or those in north China) began their holiday from January 10 to 15, 70% of enterprises stopped operations from January 20 to 26, and 14% of enterprises (mainly those with direct aluminum liquid supply or large enterprises) started their holiday after January 27 (the 28th day of the lunar month). Most enterprises plan to resume operations around February 5 (the eighth day of the lunar calendar), while some have yet to determine their specific resumption dates, depending on the holiday schedules of downstream customers. The number of days furnaces are shut down varies, with approximately 25% of enterprises taking less than 10 days off, 55% taking 10-20 days off, and 20% taking more than 20 days off. Overall, the holiday arrangements for secondary aluminum plants this year are not significantly different from previous years. On the import side, current overseas ADC12 prices are in the range of $2,440-2,470/mt. A sharp drop in the US dollar index led to a significant appreciation of the yuan against the US dollar during the week, reaching a one-month high. As a result, the immediate loss on imported ADC12 narrowed significantly to within 100 yuan, approaching the break-even point. Overall, with most secondary aluminum plants and downstream enterprises entering the Chinese New Year holiday, the market is characterized by prices without transactions. Due to the continued tight supply of raw materials, ADC12 prices are expected to remain firm in the short term after the holiday.
