Primary Aluminum Rises Strongly, Aluminum Scrap Market Remains Stable Overall [Daily Aluminum Scrap Review]

SMM October 27:

Spot primary aluminum prices continued to rise today compared with the previous trading day, with SMM A00 spot aluminum closing at 21,160 yuan/mt, while aluminum scrap prices remained largely flat overall. As the traditional peak season draws to a close, tight supply remains the main theme in the aluminum scrap market, keeping procurement prices high, though the sustainability of these elevated levels remains to be seen.

Today, baled UBC was quoted in a range of 16,000-16,500 yuan/mt (ex-tax), and shredded aluminum tense scrap (priced based on aluminum content) was quoted in a range of 17,300-17,800 yuan/mt (ex-tax). Baled UBC rose 50 yuan/mt WoW, while shredded aluminum tense scrap (priced based on aluminum content), scrap wheel hub, and mechanical casting aluminum scrap remained flat WoW. Recently, reports from Henan and Hubei indicated that buyers are driving down prices for wrought aluminum alloy scrap in the extrusion category, with price reductions ranging from 300-800 yuan. SMM attributes this to the approaching end of the peak season, rapid order declines, and insufficient demand. Regarding the price difference between A00 aluminum and aluminum scrap, the price difference between A00 aluminum and mechanical casting aluminum scrap in Shanghai widened by 50 yuan/mt WoW to 2,422 yuan/mt, while the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan widened by 50 yuan/mt WoW to 2,311 yuan/mt.

The aluminum scrap market is expected to hold up well this week, with mainstream prices for shredded aluminum tense scrap (priced based on aluminum content) hovering around 17,500-18,000 yuan/mt. As primary aluminum prices stabilize above the 21,000 yuan/mt mark, further positive sentiment will support aluminum scrap prices, and the tight supply situation is unlikely to change in the short term. Demand side, demand resilience remains in sectors such as NEVs and PV, but the end of the traditional peak season and high social inventory pressure may curb procurement enthusiasm. Close attention should be paid to the pace of post-holiday restocking by secondary aluminum enterprises and the sustainability of end-use demand. If primary aluminum prices retreat after a rapid rise or downstream demand falls short of expectations, the aluminum scrap market could face a pullback. Overall, the market will continue to see a tug-of-war between sellers and buyers, and it is crucial to closely monitor primary aluminum price trends and policy developments.