This week, the domestic aluminium scrap market continued to fluctuate at highs, with significant price differentiation. Spot primary aluminium prices fluctuated at highs during the week. As of July 3, the SMM A00 aluminium ingot prices closed at RMB 20,860 per tonne, up RMB 250 per tonne from last Thursday.
Secondary aluminium raw materials:
Due to off-season demand suppression, the overall fluctuation of aluminium scrap was limited: shredded aluminium tense scrap, with its supply remaining tight, showed strong resilience against price drops, with quotes stable at RMB 15,800-17,300 per tonne (tax not included).
Baled UBC, affected by weak orders from downstream scrap utilization enterprises, experienced rangebound fluctuations during the week, ultimately closing at RMB 15,350-15,850 per tonne (tax not included), up RMB 50 per tonne WoW.
By region, east China (such as Shanghai, Jiangsu, Shandong) closely followed primary aluminium prices, with daily adjustments ranging from RMB 50-100 per tonne. Inland provinces (such as Jiangxi, Hubei) had delayed price adjustments and remained basically stable this week.
The price difference between A00 aluminium and aluminium scrap further widened, with the price difference of mixed aluminium extrusion scrap free of paint in Foshan expanding by RMB 119 per tonne during the week to RMB 1,857 per tonne.
Downstream secondary aluminium alloy enterprises continued to operate under pressure, with weak order releases from terminal automakers and high raw material costs leading to sluggish transactions. The theoretical loss pressure of enterprises remained unresolved.
Next week, the aluminium scrap market is expected to maintain a state of fluctuating at highs and cautious price adjustments. Supported by tight supply, shredded aluminium tense scrap prices are expected to remain resilient, fluctuating rangebound within the RMB 15,800-17,400 per tonne range.
Baled UBC may continue its downward trend due to off-season demand suppression, possibly dropping to RMB 15,200-15,700 per tonne.
Regional price differences will further widen: east China, affected by primary aluminium price linkage and policy disturbances, may experience daily fluctuations of RMB 100-200 per tonne.
Inland provinces, due to delayed price adjustments and differentiated demand, lack the momentum to follow price increases. The price difference between A00 aluminium and aluminium scrap will remain rangebound, and subsequent attention should be paid to marginal changes in raw material circulation (such as the supply of ADC12 aluminium shavings) and signals of terminal order recovery.
The operating rate of the secondary aluminium industry may continue its slight downward trend, and inventory pressure may further suppress production. It is recommended to pay close attention to the dynamics of the competition between raw material costs and demand side.
Cast aluminium alloy:
This week, the futures market for cast aluminium alloy showed a strong upward trend, reaching a high of RMB 19,985 per tonne during the week.
In the spot market, the price increase of secondary aluminium alloy was sluggish. As of July 3, the SMM ADC12 price remained unchanged from last Friday at RMB 20,000-20,200 per tonne, with its theoretical premium against the most-traded contract narrowing from RMB 330 per tonne to RMB 160 per tonne.
On the cost side, aluminium scrap prices rose along with aluminium prices during the week and market feedback indicated that tightened raw material circulation made it difficult for manufacturers to source materials, deepening their reluctance to sell finished products. Additionally, silicon prices entered an upward channel since the end of June.
As of Thursday, the price of oxygen-blown #553 silicon rose by RMB 500 per tonne WoW to RMB 8,700 per tonne and copper prices also increased. The collective rise in costs of core raw materials such as aluminium scrap, silicon and copper has driven up the cost of ADC12 raw materials.
However, it has been difficult to synchronously raise product selling prices, leading to a continuous expansion of theoretical losses in the industry and intensified pressure on enterprise production and operation.
Demand side, entering July, the demand side has been under significant pressure. Multiple factors such as the high-temperature off-season, high aluminium prices and declining orders have continued to impact downstream orders, prompting some die-casting enterprises to initiate production reduction modes.
Despite active inquiries from futures and spot traders during the week and an increase in trading volume of delivery brands, the end-use consumption market remains sluggish, posing a key resistance to price increases.
Supply side, facing the dual challenges of raw material supply deficits and weak market demand, some secondary aluminium producers have resorted to short-term furnace shutdowns for maintenance or reduced their operating rates. Social inventory continues to accumulate.
On July 3, SMM reported that the social inventory of secondary aluminium alloy ingots in major domestic consumption areas stood at 23,232 tonnes, an increase of 2,646 tonnes from Thursday of the previous week.
Overall, in the absence of substantial improvement in demand, prices encounter resistance in rising, but the cost support logic remains intact. It is expected that secondary aluminium alloy prices will maintain a rangebound fluctuation in the short term.
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.
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