Aluminum Scrap: The aluminum scrap market showed a differentiated adjustment trend after the Labor Day holiday. As of May 8, SMM A00 primary aluminum spot cargo closed at 19,620 yuan/mt, down a cumulative 440 yuan/mt from the pre-holiday level (April 30). Aluminum scrap prices generally followed the decline in primary aluminum, but significant differences were observed across product types and regions. By product, the price of baled UBC fell from 15,050-15,650 yuan/mt (tax excluded) before the holiday to 14,800-15,400 yuan/mt, with a cumulative drop of 200 yuan/mt during the week. However, in Jiangxi and other regions, the decline was narrowed due to higher recycling prices, and some aluminum tense scrap prices remained resilient due to tight supply. The supply of aluminum tense scrap products was tight, and the price range of shredded aluminum tense scrap slightly decreased from 15,850-17,350 yuan/mt before the holiday to 15,650-17,150 yuan/mt. Regionally, quotes in Hunan, Jiangxi, and South China remained firm, with price adjustments lagging behind those of primary aluminum. In contrast, east China and central China closely tracked aluminum prices, with a cumulative drop of 100-150 yuan/mt during the week. On the demand side, constrained by weak orders from downstream processing enterprises, the operating rate of secondary aluminum enterprises declined, and procurement was mainly driven by immediate needs. The price difference between primary metal and scrap fluctuated more sharply, with the price spread between A00 aluminum and aluminum tense scrap in Shanghai narrowing to 1,871 yuan/mt and that between A00 aluminum and profile aluminum in Foshan decreasing to 1,386 yuan/mt, reflecting stronger cost support for aluminum scrap. Looking ahead, the aluminum scrap market is expected to continue fluctuating at highs. The tight supply situation for aluminum tense scrap products is unlikely to change, providing strong price support. Aluminum tense scrap prices will still be mainly influenced by fluctuations in primary aluminum, and narrow adjustments are anticipated. Going forward, attention should be paid to macro risks such as a potential policy shift by the US Fed and geopolitical conflicts, which could trigger sharp fluctuations in primary aluminum prices. Additionally, concentrated production cuts by domestic secondary aluminum enterprises may put downward pressure on aluminum scrap prices.
Secondary Aluminum Alloy: This week, the center of aluminum prices moved downward, and the prices of secondary aluminum alloy continued to decline. As of May 8, the SMM ADC12 price had fallen by 200 yuan/mt from the pre-holiday level to the range of 20,200-20,400 yuan/mt. On the cost side, despite the pullback in the prices of aluminum scrap raw materials and silicon metal, which lowered the production cost of ADC12, the cost support was strengthened by traders' behavior of standing firm on quotes due to the contraction in the circulation of aluminum scrap. Continuous pressure on the demand side became the main factor constraining prices. Post-holiday market transactions were relatively sluggish, with downstream enterprises mainly making just-in-time procurement and a small amount of restocking driven by just-in-time needs. Moreover, the continuous decline in aluminum prices exacerbated market wait-and-see sentiment. Additionally, after entering May, the characteristics of the traditional off-season gradually emerged, compounded by the impact of tariffs, leading to a reduction in both domestic and overseas orders. In terms of supply, the operating rate of secondary aluminum smelters showed a slight recovery after the holiday. However, under the dual pressure of high costs and insufficient orders, some enterprises chose to cut production or even halt operations to stop losses. It is expected that the industry's operating rate will continue to decline in May. On the import front, overseas ADC12 quotes were lowered to $2,410-2,440/mt this week, with the immediate loss of imported ADC12 hovering around 600 yuan/mt, and the import window remaining closed. Overall, the current secondary aluminum market is in a phase of contention between cost support and weak demand. In the short term, ADC12 prices may maintain a fluctuating rangebound trend. In the later stage, close attention should be paid to the supply situation of aluminum scrap and the pace of improvement in end-use consumption. If the raw material side remains tight and aluminum prices stabilize, ADC12 may reach a phased bottom. However, before a substantive recovery in demand, price increases will still be suppressed.
