Aluminum Prices Fall, Aluminum Scrap Prices Follow Suit [Daily Review of Aluminum Scrap]

SMM, May 27:

Today, spot primary aluminum prices fell by 150 yuan/mt from the previous trading day. SMM A00 spot aluminum closed at 20,200 yuan/mt. Aluminum scrap market prices followed the decline in aluminum prices but remained at highs overall. With the off-season in June approaching, downstream processing enterprises are experiencing weak order releases, and procurement is mainly driven by immediate needs. Today, the quoted prices for baled UBC aluminum scrap were concentrated in the range of 15,150-15,750 yuan/mt (tax not included), while the quoted prices for shredded aluminum tense scrap were concentrated in the range of 15,700-17,200 yuan/mt (tax not included). Regionally, Shanghai, Jiangsu, Henan, Shandong, and other regions closely tracked aluminum prices, with price adjustments ranging from 100-150 yuan/mt. However, the overall price adjustment range still lagged behind that of primary aluminum.

In terms of the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mechanical casting aluminum scrap in Shanghai increased by 13 yuan/mt from yesterday to 1,863 yuan/mt. In Foshan, the price difference between A00 aluminum and aluminum extrusion scrap continued to rise by 150 yuan/mt from yesterday to 1,364 yuan/mt.

In the short term, aluminum scrap market prices are expected to continue fluctuating at highs. The tight supply situation for aluminum tense scrap is unlikely to change, providing solid price support. Wrought aluminum alloy scrap will continue to fluctuate rangebound with primary aluminum. However, the accumulated risk of a high-level correction in primary aluminum prices, combined with weak demand during the off-season, will limit upside room. For downstream enterprises using aluminum scrap, the ongoing struggle between cost pressure and weak end-user orders may keep operating rates low. The narrowing of import losses may partially alleviate supply pressure, but the transmission effect will be limited. Regional and product-specific price differences may further diverge. Tight supply in South China and other regions may support localized price increases, while prices in regions with weak demand will face downward pressure.

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