Tight Aluminum Scrap Supply Supports ADC12 Aluminum Alloy Prices[Weekly Review of Aluminum Scrap and Secondary Aluminum]

Recycled aluminum raw materials: Aluminum scrap prices fluctuated at highs this week. As of September 4, the SMM A00 price closed at 20,610 yuan/mt, down 120 yuan/mt WoW. Aluminum scrap supply remained tight, with shredded aluminum tense scrap particularly scarce and prices holding firm, maintaining a mainstream range of 17,200-17,700 yuan/mt. Baled UBC prices adjusted in line with aluminum prices, hovering around 15,500-16,000 yuan/mt with weekly fluctuations of about 100 yuan/mt. Regional disparities were evident: Shanghai, Jiangsu, Shandong, and Henan closely tracked aluminum price movements with adjustments of 50-100 yuan/mt, while Jiangxi, Hubei, Foshan, and Anhui lagged behind, remaining stable WoW. Recent sharp price adjustments in some regions stemmed from unconfirmed policy implementation, exacerbating supply shortages and forcing scrap utilization enterprises to raise raw material procurement prices to maintain production.

Next week, aluminum scrap prices are expected to hover at highs amid intensified supply-demand tug-of-war. From a macro perspective, ongoing nationwide crackdowns on illegal tax rebates will profoundly impact secondary aluminum production costs. Although current procurement quotes from scrap utilization enterprises haven’t reflected actual policy effects during this transitional period, industry uncertainty continues to rise. Long-term, downstream enterprises may further bargain down purchasing prices to offset potential tax cost increases, keeping downside risks for scrap prices. However, tight supply—especially for shredded aluminum tense scrap—will sustain suppliers’ pricing power in the short term. SMM forecasts shredded aluminum tense scrap (water price) to trade within 17,200-17,700 yuan/mt, while baled UBC prices will hover at 15,500-16,000 yuan/mt supported by rigid demand. Market participants should closely monitor tax policy implementation progress and actual September peak season demand recovery, as price trends will depend on the interplay between cost transmission and supply constraints.

Secondary aluminum alloy: This week, cast aluminum alloy futures fluctuated downward, with the most-traded 2511 contract closing at 20,215 yuan/mt on Thursday. Spot side, ADC12 prices remained firm, with SMM's September 4 quote holding steady at 20,750 yuan/mt WoW, widening its premium to 535 yuan/mt against the most-traded contract. Cost side, tight supply of aluminum scrap, especially aluminum tense scrap, kept prices elevated or even rising against the trend, pushing up procurement costs and sustaining ADC12's firm quotes. Recently, A00 aluminum's price center dipped slightly, diverging from ADC12's stable pricing and narrowing their price spread. Facing procurement challenges for aluminum tense scrap, some firms increased purchases of aluminum soft scrap. Demand side, September saw narrow recovery in secondary aluminum consumption, with limited order growth failing to meet peak-season expectations. Supply side, seasonal demand lifted operating rates at secondary aluminum plants, while eased environmental restrictions in Hebei and Jiangxi further boosted production. However, future operating rates face constraints from unclear local tax rebate policies, scrap procurement difficulties, and high raw material costs. Inventory side, social inventory of secondary aluminum alloy ingots in major consumption areas totaled 40,197 mt on September 4, up 2,673 mt WoW, remaining in buildup phase, while plant-finished and raw material stocks stayed low. Import side, overseas ADC12 quotes rose slightly by $20/mt to $2,500–2,520/mt this week, with domestic spot prices at 20,000–20,200 yuan/mt, keeping import losses below 300 yuan/mt. Short-term ADC12 prices are expected to hover at highs on cost support, but limited demand recovery and inventory buildup cap upside room. Further trends require close monitoring of raw material supply, demand recovery pace, and policy developments.