ADC12 Consolidates on a Strong Note as Costs Rise and Orders See Marginal Improvement [Aluminum Scrap and Secondary Aluminum Weekly Review]

Aluminum scrap:

This week, China's aluminum scrap market price center edged up alongside primary aluminum. As of September 10, SMM A00 aluminum prices closed at 24,560 yuan/mt, up 210 yuan/mt from 24,350 yuan/mt last Thursday. Domestic aluminum scrap prices followed with relatively limited gains, but supported by raw material scarcity and selling activity at some yards, mainstream grades such as shredded aluminum tense scrap and bare bright aluminum wire were quoted on a consolidate on a strong note basis, with traders in some regions slightly raising purchase prices in tandem. In terms of price spreads, on September 10, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was about 2,436 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was about 1,415 yuan/mt, widening slightly again WoW. On the supply side, the tight raw material supply pattern remained unchanged, and the scarcity of compliant, invoiced aluminum scrap continued to rise, constraining operating rates and procurement at scrap utilization enterprises. Against this backdrop, some aluminum scrap yards actively sold amid high aluminum prices while reducing purchases and stockpiling, leading to a phased release of circulating supply. The aluminum scrap market is expected to continue to consolidate on a strong note next week. With the September peak season in its early stage, a substantive recovery in downstream end-user orders still needs to be observed. Active selling by yards may persist in the near term, but the tight supply of high-quality invoiced scrap is unlikely to improve materially. Shredded aluminum tense scrap (priced based on aluminum content) is expected to trade in the range of 20,700-21,300 yuan/mt, with close attention needed on the pace of downstream order recovery and the sustainability of yard selling activity.

Secondary aluminum alloy:

This week, ADC12 market prices were on a consolidate on a strong note basis overall. SMM ADC12 prices rose from 24,300 yuan/mt to 24,450 yuan/mt, with stronger cost support and marginal demand improvement pushing the price center slightly higher. On the cost side, aluminum prices held up well this week, driving partial gains in aluminum scrap prices, and combined with rising copper prices, overall production costs at alloy enterprises increased further. Meanwhile, tax invoice policies tightened in some regions, keeping procurement costs for compliant raw materials at high levels. On the demand side, September marks the traditional peak consumption season, and orders at end-user enterprises such as automakers recovered from earlier levels, with market demand showing marginal improvement. However, the overall recovery remained limited, the peak season effect has not yet fully materialized, and downstream procurement remained primarily need-based. Demand is expected to have further room for release as end-user production recovers further in the latter half of September. In terms of supply, the operating rate at industry leaders in the secondary aluminum sector rebounded slightly by 1.0 percentage point to 52.6% this week. Improving orders drove a continued recovery in production operating rates, but overall operating levels still lagged the same period last year. On the import side, overseas ADC12 offers rose to $3,080-3,220/mt, and import losses narrowed to about 400 yuan/mt. However, price gains outside China were weaker than domestic gains, the import window has not fully opened, and the replenishment of domestic supply by imported cargoes remains relatively limited in the short term. ADC12 prices are expected to continue to consolidate on a strong note in the near term. Tight aluminum scrap supply, high compliance costs, and firm aluminum prices will jointly limit downside room for prices, with the cost side remaining a key support. Whether prices can rise further depends mainly on the extent to which peak season demand is actually realized. If downstream orders continue to improve and social inventory buildup pressure gradually eases, ADC12 prices still have further upside room. If peak season demand release falls short of expectations, prices may continue to consolidate at highs under cost support.