Tight aluminum scrap supply pushes up costs; focus on the pace of consumption improvement in the short term [SMM Morning Comment on Cast Aluminum Alloy]

Published: Aug 14, 2025 09:04 (GMT+8)

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[SMM Morning Comment on Cast Aluminum Alloy: Tight Supply of Aluminum Scrap Drives Up Costs; Short-Term Focus on Consumption Improvement] Aluminum prices expanded their gains on Wednesday, with aluminum scrap prices accelerating their upward trend amid undersupply, generally rising by 50-100 yuan/mt, which further pushed up the price of ADC12. SMM ADC12 prices increased by 100 yuan/mt to 20,350 yuan/mt. In August, the secondary aluminum market remained constrained by the tight supply of aluminum scrap, with enterprises facing continuous cost pressure, supporting ADC12 prices. However, the lack of significant improvement in consumption will limit the upside potential for price increases, and it is expected that secondary aluminum alloy prices will predominantly hold up well within a narrow range. In the short term, close attention should be paid to the progress of end-user demand recovery and the improvement in aluminum scrap supply.

8.14 SMM Morning Comment on Cast Aluminum Alloy

Futures: Overnight, the most-traded AD2511 cast aluminum alloy futures contract opened at 20,175 yuan/mt, reaching a high of 20,195 yuan/mt and a low of 20,085 yuan/mt, before closing at 20,105 yuan/mt, down 95 yuan/mt or 0.47% from the previous close. Trading volume stood at 765 lots, with open interest at 8,541 lots, primarily due to bulls reducing their positions.

Spot-Futures Price Spread Daily Report: According to SMM data, on August 13, the SMM ADC12 spot price was at a theoretical premium of 165 yuan/mt over the closing price of the most-traded cast aluminum alloy futures contract (AD2511) at 10:15 a.m.

Aluminum Scrap: On Wednesday, the spot price of primary aluminum increased by 120 yuan/mt from the previous trading day, with SMM A00 spot aluminum closing at 20,760 yuan/mt. The overall aluminum scrap market prices followed suit. Baled UBC aluminum scrap was quoted at 15,500-16,000 yuan/mt (tax-excluded), while shredded aluminum tense scrap (with water price) was quoted at 17,100-17,600 yuan/mt (tax-excluded price). Baled UBC aluminum scrap prices rose by 50 yuan/mt MoM, while shredded aluminum tense scrap (with water price) and automobile/motorcycle wheel hub prices increased by 100 yuan/mt MoM. Regionally, Shanghai, Jiangsu, Shandong, Jiangxi, and other areas closely followed aluminum price movements, with price adjustments ranging from 50-100 yuan/mt. In Hubei, prices remained flat MoM today. Regarding the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan narrowed by 8 yuan/mt to 1,972 yuan/mt, while the price difference between A00 aluminum and mechanical casting aluminum scrap in Shanghai narrowed by 15 yuan/mt to 1,941 yuan/mt.

Silicon Metal: On August 13, SMM east China non-oxygen blown #553 silicon metal was priced at 9,100-9,300 yuan/mt; oxygen-blown #553 at 9,300-9,500 yuan/mt; #521 at 9,500-9,700 yuan/mt; #441 at 9,600-9,800 yuan/mt; #421 at 9,600-9,900 yuan/mt; #421 silicone at 10,200-10,600 yuan/mt; and #3303 at 10,700-10,900 yuan/mt. Silicon metal prices in Kunming, Huangpu Port, north-west China, Tianjin, Xinjiang, Sichuan, and Shanghai also remained stable.

Overseas Market: Overseas ADC12 quotes remained stable at $2,460-2,480/mt, with imported spot prices hovering around 19,600 yuan/mt, maintaining an immediate loss status for imports. The local ADC12 quotes in Thailand (tax-excluded) rose slightly to 82-84 baht/kg.

Inventory: According to SMM statistics, on August 13, the daily social inventory of secondary aluminum alloy ingots in Foshan, Ningbo, and Wuxi totaled 31,611 mt, an increase of 138 mt from the previous trading day and 393 mt from Wednesday (August 6) of last week.

Summary: On Wednesday, aluminum prices extended their gains, with aluminum scrap prices accelerating their upward trend amid undersupply, generally rising by 50-100 yuan/mt, further pushing up ADC12 prices. SMM ADC12 prices rose by 100 yuan/mt to 20,350 yuan/mt. The secondary aluminum market in August continues to be constrained by tight aluminum scrap supplies, with enterprises facing sustained cost pressure, supporting ADC12 prices. However, the lack of significant recovery in consumption will limit the upside potential for prices, and secondary aluminum alloy prices are expected to hold up well within a narrow range. In the short term, close attention should be paid to the recovery progress of end-use demand and the improvement in aluminum scrap supply.

[Data Source Statement: Except for publicly available information, other data are derived from public information, market exchanges, and processed by SMM based on its internal database model, for reference only and not constituting decision-making advice.]

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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