ADC12 cost support continues, pre-holiday demand mildly improves

Aluminium scrap:

This week, China's Aluminium scrap market remained relatively stable. As of September 24, SMM A00 Aluminium prices closed at RMB 24,240 per tonne, up slightly by RMB 60 per tonne from RMB 24,180 per tonne last Thursday, with domestic Aluminium scrap market prices holding steady overall. In terms of price spreads, on September 24, the price difference between A00 Aluminium and mixed Aluminium extrusion scrap free of paint in Foshan was about RMB 2,482 per tonne, and the price difference between A00 Aluminium and shredded Aluminium tense scrap was about RMB 1,261 per tonne. On the import side, Aluminium scrap imports in August were 142,000 tonne, up 18.60per cent M-o-M but down 17.67 per cent Y-o-Y, ending the four consecutive monthly declines since April; cumulative imports from January to August were about 1.243 million tonne, down about 7.5per cent YoY. The MoM recovery in August was mainly driven by the resumption of shipping schedules and replenishment of Southeast Asian supply. In terms of supply, tax audits in Henan, Hunan, and other regions continued to intensify and expand, with compliant invoiced Aluminium scrap becoming increasingly scarce and prices receiving strong support; meanwhile, non-invoiced supply saw narrowing sales channels under compliance pressure, with some traders forced to cut prices to sell, keeping prices under persistent downward pressure. In terms of demand, the cast Aluminium alloy "September peak season" fell short of expectations, with demand yet to see substantial release; wrought Aluminium alloy demand was moderate, and in-factory Aluminium scrap inventory was relatively ample. Next week, the Aluminium scrap market is expected to continue consolidating on a strong note, with mainstream shredded Aluminium tense scrap (priced based on Aluminium content) expected to trade around RMB 20,500-21,200 per tonne. Close attention should be paid to the scope of tax audit expansion and downstream stocking before the National Day holiday.

Secondary Aluminium alloy:

This week, SMM ADC12 prices held steady at RMB 24,500 per tonne during the week. On the cost side, Aluminium scrap raw material prices fluctuated only slightly this week, but the impact of stricter tax invoice policy enforcement became more evident. Enterprises faced higher compliance procurement requirements, invoiced Aluminium scrap supply was relatively tight, and some enterprises' comprehensive raw material procurement costs remained elevated. With strong cost support, even as Aluminium prices and futures pulled back in stages, ADC12 producers had limited room to proactively lower prices. In the short term, the cost side is expected to remain a key factor supporting prices. On the demand side, end-use orders in September improved only marginally, with downstream procurement still primarily need-based. This week, pre-Mid-Autumn Festival stocking demand was released to some extent, but the overall intensity was mild, providing insufficient support for price increases. As the National Day holiday approaches, pre-holiday restocking demand may increase further, but whether demand can sustain improvement after the holiday remains to be seen. On the supply side, the operating rate of industry leaders in the secondary Aluminium sector held at 53.3per cent this week. Most sampled enterprises maintained production during the Mid-Autumn Festival, while some arranged production halts of about 3 days for National Day. This year, enterprises generally had more holiday days, mainly affected by tight raw material supply, high procurement costs, stricter tax invoice compliance requirements, and downstream clients' holiday arrangements. Some enterprises adjusted production by reducing loads, conducting maintenance, or extending holidays. On the inventory side, domestic cast Aluminium alloy ingot social inventory fell to 31,800 tonne this week, down 2,700 tonne M-o-M, ending six consecutive weeks of inventory buildup. The widening spot-futures price spread and pre-holiday stockpiling drove inventory destocking; further destocking is expected before National Day. On the import side, overseas ADC12 quotes remained in the range of USD 3,100-3,200 per tonne, with import profit margins near breakeven. In the short term, ADC12 prices are expected to consolidate on a strong note. Pre-National Day stocking demand is expected to drive phased improvement in spot transactions, and social inventory may destock further. Meanwhile, the impact of stricter tax invoice policies on compliant Aluminium scrap supply and procurement costs may persist, providing relatively solid support below prices. However, as end-use demand has yet to show sustained improvement and high prices still somewhat constrain downstream procurement, room for further price increases may be limited. Going forward, close attention should be paid to the actual release of pre-holiday stocking, progress in tax invoice policy enforcement, and changes in Aluminium scrap supply.

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.