Aluminum Scrap Followed the Decline During the Week, Short-Term Tight Supply Supports Prices[Weekly Review of Aluminum Scrap and Secondary Aluminum]

Domestic aluminum scrap prices moved in tandem with the decline in primary aluminum this week, with the price center shifting lower. As of November 20, the SMM A00 aluminum price closed at 21,570 yuan/mt, down 350 yuan/mt from last Thursday, showing a notable WoW pullback. Mainstream aluminum scrap categories stabilized after synchronous declines, with the mainstream quotation for shredded aluminum tense scrap (including moisture) adjusted from 18,100–18,600 yuan/mt to 17,800–18,300 yuan/mt (tax excluded), while baled UBC traded in the range of 16,000–16,500 yuan/mt (tax excluded). Buyers in Foshan, Henan, and Jiangxi adopted a wait-and-see stance toward the decline in primary aluminum, with single-day drops of 100–150 yuan/mt. Cumulative declines in Jiangxi and Henan reached 200 yuan/mt. Price differences between primary metal and scrap showed diverging trends: on November 20, the price difference between A00 aluminum and machinery aluminum scrap in Shanghai narrowed to 2,113 yuan/mt from 2,119 yuan/mt at the beginning of the week, while the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan widened to 2,584 yuan/mt from 2,506 yuan/mt. Market supply remained tight, with low inventory levels at scrap yards. Demand side, cast aluminum alloy segment remained stable, while wrought aluminum segment weakened. Aluminum scrap prices are expected to hover at highs next week, with shredded aluminum tense scrap (including moisture) likely fluctuating in the range of 17,800–18,600 yuan/mt. Supply side, the tight supply pattern in the aluminum scrap market is unlikely to change in the short term. However, as primary aluminum prices fluctuate at highs, fear of high prices may intensify, weakening the willingness of some regions to follow price increases. Overall, the market will continue the tug-of-war between sellers and buyers at high levels, and it is advisable to closely monitor primary aluminum price trends and procurement strategy adjustments of downstream enterprises.

At the beginning of the week, the most-traded cast aluminum alloy futures contract extended the pullback from last Friday, falling from the high of 21,300 yuan/mt to around 20,800 yuan/mt before entering a consolidation phase, and closed at 20,780 yuan/mt on Thursday. Spot side, ADC12 prices also weakened. The SMM quotation on November 20 was 21,450 yuan/mt, down 200 yuan/mt from last Friday. Influenced by the significant decline in A00 aluminum prices, the inverted price spread between ADC12 and A00 narrowed. Cost side, aluminum scrap prices pulled back overall with aluminum prices this week, driving down ADC12 raw material costs. However, tight supply limited the decline, and pressure on secondary aluminum plants' procurement due to some traders' reluctance to sell supported ADC12's resistance to declines. Demand side, the sharp correction in aluminum prices during the week stimulated inquiry activity, with some downstream enterprises restocking on dips. However, overall procurement sentiment remained cautious, dominated by just-in-time procurement. Actual consumption remained stable without significant fluctuations. Supply side, the operating rate of leading enterprises in the secondary aluminum industry held steady at 60.6% WoW. constrained by raw material supply shortages, overall industry operating rate increases still face resistance, with enterprise raw material and finished product inventories remaining low. Import side, overseas ADC12 quotations rose to the range of $2,600–2,640/mt during the week. Due to declining domestic prices, immediate import losses expanded to above 400 yuan/mt, keeping the import window closed. Overall, limited downside room for ADC12 prices is supported by costs and supply, but short-term aluminum price declines and cautious demand suppress rebound momentum. Prices are expected to consolidate within the range of 21,200–21,600 yuan/mt in the short term.