Cost Support and Poor Demand to Keep Prices of ADC12 Rangebound in Near Term

SHANGHAI, Feb 17 — In terms of cost, tight aluminium scrap supply, combined with recyclers reluctant to sell, prevented the prices of aluminium scrap, especially tense scrap, from falling with aluminium prices. The current cost is firm around 19,200 yuan/mt, providing strong support for ADC12 aluminium alloy prices. As for demand, downstream consumption of secondary aluminium recovered slowly after Chinese New Year holiday. As of mid-February, other industries have not seen a significant increase in orders except for the new energy sector. Trading did not improve sharply this week and the sluggish demand prevented ADC12 prices from rising. With regard to market demand, most companies expect end-user orders to increase in March or May and see depleted upside momentum in the short term.

On the supply side, the operating rates of the secondary aluminium industry continued to rise this week, but it was still lower than the normal level before CNY holiday. Under the pressure of insufficient orders, tight raw materials and high costs, the operating rates of the secondary aluminium industry can hardly rebound significantly in the short term. In terms of imports, quotes of imported ADC12 this week remained stable at $2,450-2,500/mt, leaving small import losses at 500-700 yuan/mt. 

On the whole, cost support and poor demand are expected to keep the prices of ADC12 rangebound in the near term.