SMM, July 1:
SMM A00 spot aluminum prices closed at 22,260 yuan/mt today, down 240 yuan/mt from the previous trading day, and aluminum scrap market prices generally followed the decline. By product, bare bright aluminum wire and white-grade scrap fell by 200-300 yuan/mt, while aluminum tense scrap generally dropped 100 yuan/mt. The supply side remained tight, supervision of the reverse invoicing policy tightened, and production cuts or shutdowns spread among small and medium-sized scrap utilization enterprises in Anhui, Jiangxi, Hubei and other regions, increasing the scarcity of compliant, invoiced aluminum scrap. On the import side, due to a 1-3 month shipping lag, June-August port arrivals of aluminum scrap are expected to remain low. Additionally, the UAE implemented a temporary ban on aluminum scrap exports for four months starting June 3, further intensifying expectations of tight high-quality scrap supply in Asia. Regarding price spreads, on July 1, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 1,867 yuan/mt, and that between A00 aluminum and shredded aluminum tense scrap was 559 yuan/mt. Against the backdrop of tight invoice availability and the recent rapid decline in aluminum prices, the price spread for aluminum tense scrap narrowed quickly, and some cast aluminum alloy enterprises have started using aluminum ingots instead of aluminum scrap as raw material for production.
This week, the aluminum scrap market is expected to continue consolidating at high levels with a weak bias, but downside room is limited. The mainstream range for shredded aluminum tense scrap (priced based on aluminum content) is expected at 19,300-19,900 yuan/mt (excluding tax). Constraints from the reverse invoicing policy and the lagging contraction in aluminum scrap imports continue to provide bottom support, but weak off-season demand and low downstream operating rates are suppressing upside room. Going forward, attention should be paid to the pace of policy compliance, progress in US-Iran peace talks and navigation through the Strait of Hormuz, the pace of ex-China aluminum scrap port arrivals, and changes in downstream operations in China.
