Aluminum prices rose sharply ADC12 aluminum alloy only rose slightly amid insufficient demand[Weekly Review of Secondary Aluminum Market]

Aluminum Scrap: The aluminum scrap market continued to show a divergent and adjusting trend in the first half of May. As of May 15, SMM A00 primary aluminum spot closed at 20,350 yuan/mt, up 730 yuan/mt cumulatively from Thursday, May 8. Aluminum scrap prices generally followed the upward trend of primary aluminum, but significant differences were observed across varieties and regions. The supply of aluminum tense scrap remained tight, with the price of shredded aluminum tense scrap rising from 15,650-17,150 yuan/mt (tax excluded) at the beginning of the week to 15,850-17,350 yuan/mt. Price adjustments were made cautiously, with limited upside room. Dross aluminum varieties, such as baled UBC, increased from 14,850-15,450 yuan/mt to 15,350-15,950 yuan/mt, with the extent of price adjustments primarily influenced by primary aluminum. Regional divergence was evident, with prices in Hunan, Jiangxi, and other regions remaining stable in phases and price adjustments lagging behind. East China and central China closely tracked aluminum prices, with cumulative increases of 300-500 yuan/mt during the week. Demand remained weak, with downstream processing enterprises experiencing insufficient order releases. The operating rate of secondary aluminum enterprises remained low, with procurement primarily driven by immediate needs. The price difference between primary metal and scrap fluctuated more sharply, with the price spread for machine-made aluminum tense scrap in Shanghai widening to 1,850 yuan/mt, while the price spread for mixed aluminum extrusion scrap free of paint in Foshan remained stable at 1,539 yuan/mt, reflecting the divergence in the cost transmission capacity of aluminum scrap. The aluminum scrap market is expected to continue fluctuating at highs. Aluminum tense scrap prices are expected to remain strong due to persistent supply tightness. Dross aluminum varieties will continue to be influenced by primary aluminum fluctuations, with narrow adjustments anticipated. After the continuous rise in primary aluminum prices, caution is advised regarding the risk of a correction. Coupled with weak demand during the off-season and production cut pressures on secondary aluminum enterprises, the upside room for aluminum scrap may be limited.

Secondary Aluminum Alloy: This week, the price center of secondary aluminum alloy moved slightly upward. As of May 15, the SMM ADC12 price increased by 100 yuan/mt WoW to the range of 20,300-20,500 yuan/mt. The market presented a pattern of intertwined strengthening cost support and insufficient demand. On the cost side, the continuous rise in primary aluminum prices drove aluminum scrap prices higher. Coupled with the tight circulation in the raw material market and the increasing reluctance of traders to sell, secondary aluminum enterprises faced significant cost transfer pressure. However, the limited increase in finished alloy ingot prices led to an expansion in the industry's theoretical losses. On the demand side, it continued to be under pressure from the off-season. On Monday this week, a joint statement was issued following the China-US economic and trade talks in Geneva, with both sides agreeing to reduce tariffs and set a 90-day observation period, sending positive signals to end-users. However, it will take time for the market to transmit these signals to the production side, and the boosting effect on secondary aluminum consumption is unlikely to manifest quickly. Additionally, the rapid rise in aluminum prices triggered downstream hesitation, and the overall sluggish market transaction situation showed no significant improvement. On the supply side, squeezed by both tight raw material supply and weakening demand, the operating rate of the secondary aluminum industry in May declined. In the import market, overseas ADC12 quotes fell by 10-20 US dollars/mt WoW to around 2,400 US dollars/mt. Coupled with the appreciation of the RMB exchange rate, the immediate import loss narrowed from 500 yuan/mt at the beginning of the week to around 200 yuan/mt. In the short term, secondary aluminum alloy prices may continue to fluctuate upward, as cost support remains and the easing of China-US tariffs releases positive signals. However, the seasonal weakening of demand may constrain the price increase. It is necessary to closely monitor the circulation of raw materials and the actual transmission effect of tariff policies on end-use demand.