[SMM Analysis]Multiple Regions Initiate Cleanup of Irregular Tax Rebates, Secondary Aluminum Market Hit Again

[SMM Analysis]Secondary Aluminum Market Remains Strong in Short Term Focus on Demand Recovery and Policy Implementation

【SMM Scrap Aluminium Market Analysis: Interpretating Data of Chinese Imports of Scrap Aluminium 2024-25】According to data from Shanghai Metals Market (SMM), China imported a total of 1.17 million tonnes of scrap aluminium from January to July 2025, representing a 7.34% increase compared to 1.09 million tonnes during the same period in 2024. Five key source regions: Thailand, Malaysia, the European Union, Japan and South Korea, collectively exported 696,900 tonnes to China during the same period, an 11% year-on-year increase. Their combined share of China’s total scrap aluminium imports rose from 57.61% to 59.56%, indicating a further increase in China’s reliance on these regions for scrap aluminium, especially Thailand.

[SMMaluminum price weekly review: downstream production shows positive signs before peak season macro sentiment leads aluminum prices to fluctuate upward]

[SMm Cast Aluminum Alloy Morning Comment: ADC12 Import Losses Narrow, High Aluminum Scrap Prices Support the Cost Side] In the short term, the price of ADC12 is expected to fluctuate upward, supported by both cost and policy factors, but a weak recovery in demand may limit the increase. Subsequently, it is necessary to closely monitor the progress of policy document implementation, the recovery of aluminum scrap supply, and the marginal improvement in end-use demand.

[Aluminum Morning Meeting Summary: Macro Tailwinds and Inventory Buildup Clash, Aluminum Prices Move Sideways Awaiting Consumption Guidance] Recently on the macro front, global trade tensions have continued to ease, and domestic industrial profits have shown ongoing recovery, especially with significant improvement in high-tech manufacturing profits, supporting expectations for aluminum semis demand; overseas interest rate cut expectations are also favorable for risk asset preferences. The demand side remains the core focus of the market going forward, with some companies already starting to stockpile for the upcoming peak season orders. Domestic downstream operating rates for aluminum have slightly rebounded, but as aluminum prices recover, terminal shipments have declined again, and procurement volumes of spot aluminum by processing enterprises have noticeably decreased. In terms of inventory, social inventory at major consumption sites for aluminum ingot was recorded at 466,500 mt on Wednesday, up 3,000 mt MoM. With no sign of an inventory turning point and continued buildup, futures have strengthened, and A00 aluminum absolute prices remain high, leading to weak downstream procurement sentiment and pressure on spot premiums. Overall, consumption resilience persists against a backdrop of low inventory, and macro sentiment recovery along with industry policy expectations are the main drivers for aluminum prices. It is expected that aluminum prices will continue to move sideways at high levels this week, with close attention to the strength of subsequent consumption fulfillment and overseas monetary policy trends.

[Aluminum Morning Session Summary: Aluminum Prices Continue to Fluctuate at Highs, Downstream Procurement Fear of High Prices Intensifies] Macro perspective, Trump announced trade agreements with multiple countries; the specific terms are yet unknown. However, this move may intensify competition in aluminum semis exports, exerting bearish pressure on future aluminum prices. Domestically, the NDRC emphasized expanding domestic demand and fair competition, signaling a clear intent for policy support, but the actual transmission to consumption still requires time. Demand remains the core focus for the market going forward. Some companies have started stockpiling in anticipation of improved orders during the upcoming peak season. The operating rate of downstream aluminum sectors in China has slightly rebounded, but as aluminum prices rebound, terminal shipments have declined again, and the spot procurement volume by processing enterprises has noticeably decreased. Inventory-wise, the social inventory of aluminum ingot in major consumption areas recorded 463,500 mt on Tuesday, an increase of 4,500 mt from Monday. In the traditional off-season, demand is weak, leading to continuous inventory buildup. Suppliers, not optimistic about future premiums and discounts, are actively selling. With A00 aluminum prices at high levels, downstream procurement sentiment is weak, and spot premiums are under pressure. Overall, short-term consumption shows only marginal improvement, and there is a risk of further inventory buildup. However, compared to historical data, the current total inventory remains low. Under the influence of macro tailwinds, aluminum prices are expected to receive more support, and it is anticipated that aluminum prices will continue to fluctuate at highs this week. Further upward momentum will depend on the realization of the peak aluminum consumption season.

[SHFE announced adjustments to the margin and price limit for cast aluminum alloy futures starting from August 28] With aluminum prices stabilizing yesterday, most secondary aluminum market quotes remained steady or increased by 100 yuan/mt. The current tight supply of aluminum scrap and raw material costs provided strong support to the prices of secondary aluminum alloys. Additionally, recent news about the cancellation of tax rebates and additional taxes in multiple regions has led to a high sentiment among enterprises to raise prices in response to rising cost pressures. In the short term, prices are more likely to rise than fall.