China's aluminium scrap prices to extend their gains for now

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Chinese prices for aluminium scrap have been rising steadily so far this month and are expected to continue climbing during coming weeks, supported by tightening scrap supplies and steady demand from secondary aluminium smelters, Mysteel's latest survey findings show.

On May 13, Mysteel assessed the average price for domestically-generated #6063 aluminium scrap in South China's Guangdong province at RMB 19,850 per tonne (USD 2,993 per tonne), higher by 1.5 per cent from the end of last month.

Scrap prices have increased in tandem with the rise in prices of primary aluminium, Mysteel Global noted. Improved market sentiment saw China's national spot price for primary aluminium edge up 0.8 per cent from end-April to RMB 24,561 per tonne including the 13 per cent VAT as of May 13. Mysteel assessed.

Looking ahead, Chinese prices of aluminium scrap will gain sustained upward momentum from tight availability in both the domestic and international markets, Mysteel's survey suggests.

With China's central government intensifying the "reverse invoicing" mandates for recycling companies in the past few months, aluminium scrap suppliers are struggling with higher tax liabilities, market sources observed. This has led them to reduce scrap collection and processing, resulting in the continuous decline in scrap availability in the market.

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Under the 'reverse charge invoicing system launched by Beijing in April 2024, recycling enterprises issue invoices to individual sellers when procuring waste materials, a procedure opposite to the usual practice where those paying for scrap and waste receive invoices from payees, as reported.

Meanwhile, disruptions to global primary aluminium supply caused by the Middle East conflict have triggered fierce competition for aluminium scrap worldwide, raising Import hurdles for Chinese buyers, Mysteel Global noted.

On the other hand, scrap demand among Chinese secondary aluminium manufacturers is expected to remain resilient, even though the traditional peak season for aluminium products has passed, Mysteel's survey suggests.

Production of secondary aluminium billets by the 82 domestic smelters Mysteel tracks ended a three-week drop during the week of May 8-14, rebounding by a significant 13.3 per cent on week to 28,501 tonnes.

In April, the total output of secondary aluminium alloys among the 158 Chinese smelters that Mysteel monitors had risen for the second straight month to 503,100 tonnes, up 5 per cent on month.

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