Cost and Demand Game Continues, Secondary Aluminum Prices to Hover at Highs in the Short Term[Weekly Review of Aluminum Scrap and Secondary Aluminum]

Domestic aluminum scrap prices hovered at highs amid an intensified tug-of-war between sellers and buyers this week. As of December 25, the SMM A00 aluminum price closed at 21,980 yuan/mt, up 250 yuan/mt WoW. Baled UBC traded in the range of 16,350–16,950 yuan/mt (ex-tax), while shredded aluminum tense scrap (water price) closed at 18,300–18,800 yuan/mt (ex-tax), up 200 yuan/mt over the week. Prices of wrought aluminum scrap, however, fluctuated mildly as scrap utilization enterprises slowed down procurement amid high inventory and weak orders. Aluminum scrap imports continued to grow, with November imports reaching 162,800 mt, up 2.8% MoM and 17.7% YoY. Although overseas price inversions halved traders’ import volumes, domestic scrap utilization enterprises increased direct purchases of imported aluminum scrap to reduce costs and build stocks. On the policy front, repeated environmental protection-driven production restrictions in regions such as central China further affected local aluminum scrap circulation and downstream demand, weighing on market sentiment. In addition, delays in the implementation of resource recycling policies led recycling enterprises to pass on additional tax burdens to suppliers, putting downward pressure on aluminum scrap price floors. Domestic aluminum scrap prices are expected to hover at highs around the New Year holiday, though corrections remain a risk. Supply side, tax burden pass-through continues to affect market supply structure. Demand side, stocking demand from secondary aluminum alloy enterprises ahead of the Chinese New Year will continue to support procurement of aluminum tense scrap, but slowing demand from downstream die-casting enterprises and wait-and-see sentiment driven by aluminum price fluctuations have weakened overall demand support. Policy side, uncertainty over repeated environmental protection-driven production restrictions will continue to weigh on regional demand in the short term. Price-wise, the center for shredded aluminum tense scrap (water price) is expected to hold in the range of 18,200–18,700 yuan/mt (ex-tax). Short-term focus should be on signals of easing environmental protection-driven production restriction policies, changes in downstream procurement pace, and the impact of tax burden pass-through on price floors.

Domestic aluminum scrap prices hovered at highs amid an intensified tug-of-war between sellers and buyers this week. As of December 25, the SMM A00 aluminum price closed at 21,980 yuan/mt, up 250 yuan/mt WoW. Baled UBC traded in the range of 16,350–16,950 yuan/mt (ex-tax), while shredded aluminum tense scrap (water price) closed at 18,300–18,800 yuan/mt (ex-tax), up 200 yuan/mt over the week. Prices of wrought aluminum scrap, however, fluctuated mildly as scrap utilization enterprises slowed down procurement amid high inventory and weak orders. Aluminum scrap imports continued to grow, with November imports reaching 162,800 mt, up 2.8% MoM and 17.7% YoY. Although overseas price inversions halved traders’ import volumes, domestic scrap utilization enterprises increased direct purchases of imported aluminum scrap to reduce costs and build stocks. On the policy front, repeated environmental protection-driven production restrictions in regions such as central China further affected local aluminum scrap circulation and downstream demand, weighing on market sentiment. In addition, delays in the implementation of resource recycling policies led recycling enterprises to pass on additional tax burdens to suppliers, putting downward pressure on aluminum scrap price floors. Domestic aluminum scrap prices are expected to hover at highs around the New Year holiday, though corrections remain a risk. Supply side, tax burden pass-through continues to affect market supply structure. Demand side, stocking demand from secondary aluminum alloy enterprises ahead of the Chinese New Year will continue to support procurement of aluminum tense scrap, but slowing demand from downstream die-casting enterprises and wait-and-see sentiment driven by aluminum price fluctuations have weakened overall demand support. Policy side, uncertainty over repeated environmental protection-driven production restrictions will continue to weigh on regional demand in the short term. Price-wise, the center for shredded aluminum tense scrap (water price) is expected to hold in the range of 18,200–18,700 yuan/mt (ex-tax). Short-term focus should be on signals of easing environmental protection-driven production restriction policies, changes in downstream procurement pace, and the impact of tax burden pass-through on price floors.