China's aluminium scrap prices retreat as sentiment cools

On February 11, for example, Mysteel assessed the average price for domestically-generated #6063 aluminium scrap in South China's Guangdong province at RMB 18,750 per tonne (USD 2,712 per tonne), lower by 3.6 per cent from the end of January. By the same day, China's composite primary aluminium price had also dropped 5.4 per cent from end-January to reach RMB 23,305 per tonneincluding the 13 per cent VAT, Mysteel assessed.

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"Prices in China's nonferrous market have failed to find support from fundamentals after the sentiment-driven price surge," a market watcher based in Shanghai said. "As a result, when precious metals prices plunged earlier this month, the weakened risk appetite among market players caused aluminium prices to pull back rapidly as well," he added.

Also Read: As the Chinese New Year holiday approaches, market trading sentiment remains sluggish

The weak performance of aluminium derivatives also reflected the dimmed sentiment, with the most-traded aluminium contract for March delivery on the Shanghai Futures Exchange closing at RMB 23,660 per tonneon February 11, lower by 6.5 per cent from the settlement price of January 30.

On the other hand, secondary aluminium manufacturers have slowed their purchases of aluminium scrap over the past few weeks since the previous price increases had lifted their input costs, market sources observed.

Besides, many producers of secondary aluminium billets and alloys have already halted production and begun their Chinese New Year holidays early, well ahead of the official start of celebrations on February 15, Mysteel's survey showed. This means domestic demand for aluminium scrap has waned entering this month, Mysteel Global noted.

During the week over January 30-February 5, for example, production of secondary aluminium billets by the 82 Chinese smelters under Mysteel's tracking totalled just 15,220 tonnes, lower by a significant 48.7 per cent from the end of January.

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Note: This news is published under a content and exchange agreement with Mysteel