Aluminum prices fluctuate rangebound, while aluminum scrap prices remain stable. [Daily Review of Aluminum Scrap]

SMM, June 5:

Today, spot primary aluminum prices saw a slight decrease of 30 yuan/mt compared to the previous trading day. SMM A00 aluminum ingot prices closed at 20,250 yuan/mt, while aluminum scrap market prices generally remained stable. As the off-season in June begins, downstream scrap utilisation enterprises are experiencing weak order releases, with procurement primarily driven by immediate needs.

Today, the quoted prices for baled UBC aluminum scrap are concentrated in the range of 15,000-15,500 yuan/mt (tax-exclusive), while shredded aluminum tense scrap prices are concentrated in the range of 15,500-17,000 yuan/mt (tax-exclusive). Regionally, areas such as Shanghai, Jiangsu, and Shandong closely track aluminum prices, with price adjustments ranging from 0-50 yuan/mt. In contrast, regions like Jiangxi, Foshan, and Guizhou lag behind aluminum price movements, with quoted prices remaining unchanged from yesterday. By product, baled UBC aluminum scrap prices remained stable compared to the previous trading day in Henan, Foshan, and Jiangxi, while Sichuan, Chongqing, Shanghai, and Zhejiang saw an overall decrease of 100 yuan/mt. For shredded aluminum tense scrap, except for Anhui, which chose to increase prices by 100 yuan/mt, quoted prices in other regions remained unchanged from the previous trading day.

It is expected that the aluminum scrap market will continue to fluctuate at highs. The tight supply of aluminum tense scrap is unlikely to change, providing solid price support. Wrought aluminum alloy scrap will continue to fluctuate rangebound with primary aluminum, but the risk of a high-level correction in primary aluminum prices, combined with weak demand during the off-season, may suppress upside room. The operating rate of downstream secondary aluminum enterprises is likely to remain low, with a difficult balance between costs and orders. Regarding reverse invoicing, Jiangxi, Anhui, Hubei, and other regions are actively promoting its implementation among producers and suppliers. According to feedback from some scrap utilisation enterprises, the tax costs arising from reverse invoicing will be shared by suppliers and producers, and these costs will ultimately be passed on to raw material prices. On the other hand, cast aluminum alloy futures will be listed on June 10. Futures arbitrage activities may temporarily boost market activity in the secondary aluminum alloy sector. As aluminum scrap is a core production raw material, its price sensitivity may be further heightened.

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