Primary Aluminum Prices Surge, with Wrought and Unwrought Aluminum Alloy Scrap Prices Following Suit but with Varying Degrees of Increase [Daily Review of Aluminum Scrap]

SMM June 11 News:

Today, spot primary aluminum prices surged significantly by 240 yuan/mt compared to the previous trading day. SMM A00 aluminum ingot prices closed at 20,400 yuan/mt, with aluminum scrap market prices generally following suit. As the off-season in June begins, downstream scrap utilisation enterprises are experiencing sluggish order releases, with procurement primarily driven by immediate needs.

Today, the centralized quoted prices for baled UBC scrap range from 15,050 to 15,550 yuan/mt (tax not included), while shredded aluminum tense scrap is quoted at 15,700 to 17,200 yuan/mt (tax not included). Regionally, areas such as Shanghai, Jiangsu, and Shandong closely track aluminum prices, with price adjustments ranging from 200 to 250 yuan/mt. In contrast, regions like Jiangxi, Foshan, and Guizhou lag behind aluminum price adjustments, with price changes ranging from 100 to 150 yuan/mt. By product, prices for baled UBC and mixed aluminum extrusion scrap free of paint have increased slightly by 50 to 100 yuan/mt, while bare bright aluminum wire and shredded aluminum tense scrap prices have risen by 200 yuan/mt.

In terms of the price difference between A00 aluminum and aluminum scrap, the price spread between A00 aluminum and mechanical casting aluminum scrap in Shanghai has narrowed by 30 yuan/mt compared to yesterday, closing at 1,847 yuan/mt. In Foshan, the price difference between A00 aluminum and aluminum extrusion scrap has widened by 100 yuan/mt compared to yesterday, reaching 1,514 yuan/mt.

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, coupled with weak demand during the off-season, may suppress upside room. The operating rate of downstream secondary aluminum alloy enterprises is likely to remain low, with a persistent struggle between costs and orders. Regarding reverse invoicing, regions such as Jiangxi, Anhui, and Hubei 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, ultimately being passed on to raw material prices. On another front, the cast aluminum alloy futures were listed today, June 10. Futures arbitrage activities may temporarily boost market activity in the secondary aluminum alloy sector. As aluminum scrap is a core raw material for production, its price sensitivity may be further heightened.

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