The secondary aluminum market moves sideways, and the supply-demand weakness pattern continues during the off-season [Weekly Review of Aluminum Scrap and Secondary Aluminum].

Aluminum Scrap:

This week, aluminum scrap market prices generally moved sideways. On July 16, SMM A00 spot aluminum prices closed at 23,170 yuan/mt, rebounding 220 yuan/mt from last Thursday. In terms of price spreads, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan stood at 1,972 yuan/mt on July 16, and the price difference between A00 aluminum and shredded aluminum tense scrap was 658 yuan/mt, remaining at extremely low levels. Constraints on the supply side continued to intensify, with the impact of the reverse invoicing policy deepening further, and the scarcity of compliant, invoiced aluminum scrap rising steadily. On the import front, China’s imported aluminum scrap prices edged down this week. The price of imported shredded zorba at Ningbo port was lowered from 21,920 yuan/mt to 21,820 yuan/mt (tax included), while at Tianjin port it fell from 21,970 yuan/mt to 21,770 yuan/mt (tax included). As overseas aluminum scrap quotations continued to pull back, orders for aluminum scrap imported from Southeast Asia to Guangdong increased recently compared to earlier, and the import window improved further. However, new transactions were still mainly concentrated in some low-priced resources and long-term clients, with overall spot market activity remaining relatively limited. Aluminum scrap market is expected to continue moving sideways at elevated levels. On the supply side, the constraint from the reverse invoicing policy is unlikely to reverse in the short term, and the tightness in invoiced aluminum scrap will persist; from the import side, the combined effect of multiple bearish factors will gradually emerge in the coming months, with overseas high-quality scrap supply staying low. On the demand side, downstream operating rates remained at low levels amid the deepening off-season, and end-user orders showed no substantive improvement. Scrap utilization enterprises continued their strategy of purchasing as needed, with procurement sentiment unlikely to improve significantly.

Secondary Aluminum Alloy:

This week, the ADC12 market first fell then stabilized. At the start of the week, SMM ADC12 prices were lowered by 100 yuan/mt, dragged down by falling aluminum prices and weakness in cast aluminum alloy futures. Subsequently, aluminum price fluctuations narrowed, the cost side lacked fresh drivers, and market quotes gradually stabilized. Enterprises generally prioritized selling at stable prices and making shipments as needed. On the cost side, aluminum scrap supply remained tight and the price spread between A00 aluminum and aluminum scrap stayed low, providing some support to ADC12 prices. However, as aluminum prices consolidated, the cost-push effect weakened compared to earlier. On the demand side, the traditional consumption off-season deepened, downstream enterprises began high-temperature holidays, orders pulled back further, and expectations of reduced volumes gradually increased in the second half of the month. Market trading atmosphere was subdued, with downstream enterprises mostly purchasing as needed and maintaining a strong wait-and-see sentiment. Overall demand support continued to weaken. On the supply side, the industry maintained a contraction trend. This week, the operating rate of leading secondary aluminum enterprises fell 0.3 percentage points WoW to 51.1%, under the combined impact of tight compliant raw material supply, high costs, and the demand off-season. Enterprise operating rates continued to decline. In terms of social inventory, secondary aluminum alloy ingot inventory dropped by 5,600 mt to 29,700 mt, marking the seventh consecutive week of destocking, but the degree of destocking weakened compared to the previous two weeks. On the import side, ex-China ADC12 offers remained in the $3,050–3,190/mt range. With overseas offers pulling back slightly, domestic prices holding firm, and the yuan strengthening against the US dollar, import cost pressure eased somewhat and the price spread between Chinese and overseas markets continued to recover, though the import window has not fully opened. Looking ahead to next week, tight raw material supply, low industry operating rates, and limited import replenishment will continue to support prices. However, as the impact of high-temperature holidays expands further, end-user orders are still expected to decline, and demand recovery momentum remains insufficient. The market will maintain a pattern of weak supply and demand. ADC12 prices are expected to continue moving sideways in a narrow range. In the near term, focus will be on aluminum price trends, improvements in aluminum scrap circulation, and the pace of demand evolution.