Driven by geopolitical conflicts this week, China’s aluminum scrap market fluctuated sharply in line with primary aluminum, with prices generally holding up well at high levels. As of March 12, the SMM A00 aluminum price closed at 25,260 yuan/mt, up 140 yuan/mt WoW from last Thursday. Regional divergence was evident: east China adjusted prices more sensitively, with single-day fluctuations of 300-600 yuan/mt, while central China and south China remained relatively cautious. In terms of the price difference between primary metal and scrap, as of March 12, the price difference between A00 aluminum and mixed aluminum extrusion scrap free of paint in Foshan was 3,980 yuan/mt, and the price difference between A00 aluminum and shredded aluminum tense scrap was 3,066 yuan/mt. On the supply side, tighter reverse invoicing policies continued to constrain circulation of cargoes. On the demand side, despite the traditional peak season, the recovery in terminal orders fell short of expectations. Downstream secondary aluminum alloy enterprises mainly focused on digesting inventories, and only secondary aluminum plate/sheet and strip enterprises saw a slightly better operating rate and resumed a normal procurement pace. The aluminum scrap market is expected to maintain high-level strength and fluctuations next week, with the mainstream range for shredded aluminum tense scrap (cash price) hovering around 20,600-21,400 yuan/mt (excluding tax). Primary aluminum will still be the core driver under the influence of the geopolitical situation, while the risk of price fluctuations is intensifying. On the supply side, cargo supply is being released steadily, but policy uncertainty continues to suppress circulation efficiency. On the demand side, the pace of peak-season recovery remains slow, while high prices and wild swings continue to curb purchase willingness. In the short term, close attention should be paid to primary aluminum trends amid geopolitical conflicts, the recovery in downstream orders, and the implementation of secondary recycling policies, while remaining alert to the risk of a sharp correction from high levels.
This week, the secondary aluminum alloy market extended its upward trend, with the price center continuing to move higher. Today, the SMM ADC12 price rose 400 yuan WoW from last Thursday to 25,200 yuan/mt. Cost side, as aluminum prices continued to strengthen, aluminum scrap raw material costs increased. Against the backdrop of greater cost pressure, enterprises showed a strong willingness to raise prices, which became an important factor driving prices higher. Demand recovery remained relatively slow, and March orders did not show a significant increase. Die-casting enterprises faced difficulty passing on price hikes to downstream customers, profit margins were squeezed, and acceptance of high-priced ADC12 declined, with negative feedback continuing to emerge. Downstream players mainly made just-in-time procurement, and some enterprises said that if prices continued to rise, they would consider cutting production or suspending production. Overall demand is expected to be weaker than in the same period last year. In terms of supply, the operating rate of leading enterprises in the secondary aluminum industry this week rebounded another 2.5 percentage points WoW to 58.8%. After the holiday, enterprises steadily resumed production, and the operating rate of secondary aluminum enterprises recovered slowly, though it had not yet returned to the pre-holiday level overall. On one hand, support from new orders was limited, and enterprises lacked production enthusiasm; on the other hand, affected by policy uncertainty and tight supply of compliant raw materials in some regions, the recovery in operating rates was constrained, and the overall pace of short-term supply release remained relatively slow. On the import side, affected by turmoil in the Middle East, countries including Japan and South Korea turned to procurement in Southeast Asia. Combined with rising ocean freight costs, overseas ADC12 quotations rose to around $3,400/mt, while China’s immediate import loss widened to about 1,800 yuan/mt, keeping the import window closed. Overall, secondary aluminum alloy prices continued to rise this week, but demand followed up at a relatively slow pace. In the short term, raw material costs remained at highs and provided strong support for ADC12 prices; however, if prices continue to rise, the suppressive effect of high prices on demand will become increasingly evident. At the same time, as operating rates gradually recover, there are also expectations of a mild increase on the supply side. ADC12 prices are expected to hover at highs in the short term. Going forward, focus is advised on the pace of downstream order release, pressure on the market from supply recovery progress, and the impact of the Middle East situation on aluminum prices.
