Chinese prices for aluminium scrap are expected to soften overall in coming weeks, with domestic demand for scrap materials waning as winter deepens, Mysteel's survey suggests.
The country's aluminium scrap prices have been fluctuating at high levels since last month, supported by the strong performance of primary aluminium prices, as reported. However, prices lost ground during the past two weeks as market sentiment cooled, Mysteel Global noted.
As of December 15, the average price for domestically-generated #6063 aluminium scrap in South China's Guangdong province was assessed by Mysteel at RMB 17,250 per tonne (USD 2,450 per tonne), lower by RMB 200 per tonne from a week earlier, while the country's composite primary aluminium price dropped by RMB 212 per tonne on week to RMB 21,659 per tonne including the 13 per cent VAT.
Also read: China aluminium imports fall 14% Y-o-Y in November
Domestic aluminium scrap prices will likely face increased downward pressure towards the end of this year, as the operating activity among the secondary aluminium manufacturers slows, Mysteel's survey showed.
During the week of December 11-17, for example, total output of secondary aluminium billet among the 82 domestic smelters under Mysteel's regular tracking touched a 10-month low of 31,380 tonnes after falling for five weeks straight.
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By December 17, the total billet inventories piled at these 82 sampled smelters had shrunk to an eight-month low of 4,325 tonnes, according to the survey.
As China's aluminium market fully enters the traditional winter lull, secondary aluminium makers are slowing production in response to falling end-user demand, market sources observed.
"They have relatively ample stocks of aluminium scrap at their yards, so they are currently reluctant to purchase feed materials," a market watcher based in Shanghai said. "Most scrap users are in wait-and-see mode, hoping to see the scrap prices drop further," he added.
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