ADC12 consolidates on a strong note as costs rise and orders see marginal improvement

Aluminium scrap:

This week, China's aluminium scrap market price centre edged up alongside primary aluminium. As of September 10, SMM A00 aluminium prices closed at RMB 24,560 per tonne, up RMB 210 per tonne from RMB 24,350 per tonne last Thursday. Domestic aluminium scrap prices followed with relatively limited gains, but supported by raw material scarcity and selling activity at some yards, mainstream grades such as shredded aluminium tense scrap and bare bright aluminium 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 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was about RMB 2,436 per tonne, and the price difference between A00 aluminium and shredded aluminium tense scrap was about RMB 1,415 per tonne, widening slightly again W-o-W. On the supply side, the tight raw material supply pattern remained unchanged, and the scarcity of compliant, invoiced aluminium scrap continued to rise, constraining operating rates and procurement at scrap utilisation enterprises. Against this backdrop, some aluminium scrap yards actively sold amid high aluminium prices while reducing purchases and stockpiling, leading to a phased release of circulating supply. The aluminium 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 aluminium tense scrap (priced based on aluminium content) is expected to trade in the range of RMB 20,700-21,300 per tonne, with close attention needed on the pace of downstream order recovery and the sustainability of yard selling activity.

Secondary aluminium alloy:

This week, ADC12 market prices were on a consolidate on a strong note basis overall. SMM ADC12 prices rose from RMB 24,300 per tonne to RMB 24,450 per tonne, with stronger cost support and marginal demand improvement pushing the price centre slightly higher. On the cost side, aluminium prices held up well this week, driving partial gains in aluminium 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 materialised, 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 aluminium sector rebounded slightly by 1.0 percentage point to 52.6 per cent 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 USD 3,080-3,220 per tonne and import losses narrowed to about RMB 400 per tonne. 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 aluminium scrap supply, high compliance costs, and firm aluminium 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 realised. 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.

Note: This article has been issued by SMM and has been published by AL Circle with its original information without any modifications or edits to the core subject/data.