A00 Aluminum Rebounded Today, Aluminum Scrap Market Overall Rose by 150-200 Yuan/mt [Daily Aluminum Scrap Review]

SMM, July 14:

Today, SMM A00 spot aluminum prices closed at 23,270 yuan/mt, up 270 yuan/mt from the previous trading day. The aluminum scrap market broadly followed with gains of 150-200 yuan/mt. Regarding price spread between A00 aluminum and scrap: on July 15, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan recorded 2,072 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 758 yuan/mt. Supply-side constraints continued to intensify, and the impact of the reverse invoicing policy further deepened. News emerged from Shandong about suspending reverse invoicing starting July, while production cuts and suspensions among small and medium-sized scrap utilization enterprises in Anhui, Jiangxi, Hubei and other places were spreading. The scarcity of compliant, invoiced aluminum scrap further increased. On the import front, the scarcity of high-quality overseas supply caused by the earlier inversion of price spreads between Chinese and overseas markets, along with a 1-3 month shipping lag, kept port arrivals low from June to August. Meanwhile, the UAE's aluminum scrap export ban and the EU's tariff hike further intensified the contraction effect on overseas aluminum scrap supply.

This week, the aluminum scrap market is expected to continue a sideways rangebound pattern, weighed by demand and supported by costs. The mainstream trading range for shredded aluminum tense scrap (priced based on aluminum content) is around 19,900-20,500 yuan/mt. The pullback in spot primary aluminum prices limited further narrowing of the price spread between A00 aluminum and scrap, the cost advantage of aluminum scrap over primary aluminum is unlikely to disappear in the short term, and demand-side support for scrap prices remains. If aluminum prices continue to decline, the substitution effect of primary aluminum for scrap will accelerate.