ADC12 prices remain temporarily stable, with insufficient demand constraining price increases[Weekly Review of Secondary Aluminum Market]

Aluminum Scrap: This week, the domestic aluminum scrap market continued to fluctuate at highs. As of May 22, SMM A00 primary aluminum spot cargo closed at 20,360 yuan/mt, showing a slight cumulative increase of 10 yuan/mt compared to last Thursday (May 15). The differentiation among aluminum scrap varieties persisted, with tight supply of aluminum tense scrap supporting firm prices. Shredded aluminum tense scrap quotes held steady at 15,800-17,300 yuan/mt. Dross aluminum varieties, such as baled UBC, were influenced by primary aluminum, with their price range shifting upward by 50-100 yuan/mt during the week to 15,300-15,900 yuan/mt. Regional price differences were notable, with Jiangxi raising prices by 200 yuan/mt in a single day due to tight supply. East China and central China regions followed suit, increasing aluminum prices by 50-100 yuan/mt, while Hubei and Anhui regions remained stable. The price difference between primary metal and scrap adjusted within a narrow range, with the price spread of machine-made aluminum tense scrap in Shanghai widening to 1,861 yuan/mt, and the price difference of mixed aluminum extrusion scrap free of paint in Foshan holding steady at 1,533 yuan/mt. In the short term, the aluminum scrap market is expected to continue fluctuating at highs, with the tight supply of aluminum tense scrap unlikely to change, providing solid price support. Dross aluminum will likely continue to fluctuate rangebound with primary aluminum, but the risk of a high-level correction in primary aluminum prices, coupled with weak demand during the off-season, will limit upside room. It is recommended to monitor changes in aluminum scrap circulation and the actual impact of the easing of Sino-US tariffs, while remaining vigilant against macroeconomic disruptions that could lead to temporary price pressures.

Secondary Aluminum Alloy: The secondary aluminum alloy market stabilized this week. As of May 22, the SMM ADC12 price remained flat WoW, trading within the range of 20,300-20,500 yuan/mt. The current market imbalance still centers on the weak performance of the demand side amid the off-season, with prices lacking upward momentum. However, cost support is in place. From the cost structure perspective, aluminum scrap prices remain high, accounting for nearly 90% of the production cost of ADC12, constituting the main cost burden. In terms of silicon raw materials, the decline in silicon prices continues. The price of oxygen-blown #553 silicon fell by 450 yuan/mt WoW to 8,650 yuan/mt this week, with its cost share shrinking to 2.4%. On the demand side, end-user demand remains sluggish. Some die-casting enterprises reported a 30% MoM decline in orders in May, and most maintained purchasing as needed. Coupled with the bearish sentiment among some downstream players, overall purchasing enthusiasm remains low. The supply side shows slight divergence. Production at large enterprises remains relatively stable, with limited reductions in operating rates. Operating rates at small and medium-sized enterprises have declined significantly, with some enterprises reporting that they were basically in a state of production halt in May, mainly due to insufficient orders and losses. In the short term, secondary aluminum alloy prices are expected to maintain a rangebound fluctuation pattern. The weak demand side continues to constrain the upside room for prices, but cost support still exists. Going forward, it is necessary to closely monitor the raw material supply situation, changes in orders, and the progress of production cuts at secondary aluminum enterprises. If the scale of production cuts in the industry exceeds expectations, or if supply contraction provides some support to prices.