Insufficient downstream inventory stocking before the holiday, weak demand support for secondary aluminum alloy[Weekly Review of Secondary Aluminum Market]

Aluminum Scrap: This week, the domestic aluminum scrap market maintained a pattern of fluctuating at highs. As of May 29, the SMM spot A00 aluminum experienced intensified fluctuations during the week, ultimately closing at 20,380 yuan/mt, a slight increase of 20 yuan/mt compared to Thursday last week. The differentiation among aluminum scrap varieties was significant: the supply of aluminum tense scrap remained tight, with shredded aluminum tense scrap prices holding steady at 15,700-17,300 yuan/mt. The prices of clean aluminum scrap, influenced by primary aluminum, saw the price range of baled UBC shift upwards to 15,250-15,900 yuan/mt during the week. Regional price differences further widened: east China and central China regions (Shanghai/Jiangsu/Henan/Shandong) closely tracked aluminum prices, with daily adjustments reaching up to 150 yuan/mt. In Jiangxi, due to tight supply, prices surged by 200 yuan/mt in a single day, while regions such as Hubei and Anhui maintained stable prices and adopted a wait-and-see attitude. The price difference between primary metal and scrap fluctuated rangebound, with the price spread of machine-made aluminum tense scrap in Shanghai rising to 1,863 yuan/mt. 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. Clean aluminum scrap will continue to fluctuate rangebound with primary aluminum, but the risk of a high-level correction in primary aluminum prices and weak demand during the off-season may suppress upside room. Regional differentiation will continue to deepen: regions with tight supply, such as south China, have local upward momentum for price adjustments, while regions with weak demand face downward price pressure. Downstream secondary aluminum enterprises remain in a dilemma—high costs and weak orders have kept operating rates low.

Secondary Aluminum Alloy: This week, aluminum prices first declined and then rebounded, with A00 prices fluctuating around the 20,300 yuan/mt level, while secondary aluminum alloy prices followed the decline but not the increase. As of May 29, the SMM ADC12 price fell by 100 yuan/mt WoW to the range of 20,200-20,400 yuan/mt. On the cost side, the production cost of ADC12 dropped back slightly this week but the decline was smaller than that of the price, leading to a further expansion of industry losses. On the demand side, under the pressure of insufficient orders, the market still faced significant shipping pressure, dragging prices down further. Additionally, as the Dragon Boat Festival holiday approached, downstream buyers showed low enthusiasm for inventory buildup, with only small quantities being stocked, limiting the demand-driving effect. On the inventory side, as of May 29, the total social inventory of secondary aluminum alloy ingots in major domestic consumption areas reached 15,339 mt, an increase of 2,770 mt from last Thursday. As the off-season gradually deepened, the pace of inventory buildup accelerated. In terms of supply, during the Dragon Boat Festival holiday, secondary aluminum smelters either suspended production for 1-2 days or operated normally, resulting in a slight decrease in the overall industry operating rate. Looking at the entire month of May, frequent production cuts and suspensions occurred in the market due to production losses and insufficient orders, with production continuing to decrease compared to April. On the import side, overseas ADC12 quotes remained at USD 2,380-2,400/mt this week, while domestic import spot prices fell by 100 yuan/mt to 19,200-19,400 yuan/mt. The immediate import losses expanded WoW to the range of 200-300 yuan/mt. In the short term, secondary aluminum alloy prices are expected to fluctuate rangebound. Weak demand restricts the upside room for prices, but cost support still exists. Subsequent focus should be on tracking changes in raw material supply, order volumes, and the progress of production cuts by secondary aluminum enterprises.