Imports of aluminium scrap and aluminium alloys both increased in December, with Thailand's aluminium scrap imports accounting for 23.3 per cent of total imports

Futures: The aluminium alloy 2603 contract closed at RMB 22,655 per tonne. The latest candlestick broke below the short-term support, hitting a low of 22,525, indicating that bears still dominated. Open interest was 19,393, down 127 from the previous value, suggesting funds were exiting during the current decline rather than actively increasing short positions, which may limit the sustainability of the bearish trend. Trading volume was 4,812, within the normal recent range, with no signs of high-volume selling. The K-value was 20.82, D-value 28.61, and J-value 5.22; all three lines have entered the oversold zone (below 20), indicating potential for a short-term technical rebound, but an extended oversold condition is also possible.

Spot-Futures Price Spread Daily Report: According to SMM data, on January 20, the SMM ADC12 spot price had a theoretical premium of RMB 1,165 per tonne over the closing price of the most-traded cast aluminium alloy contract (AD2603) at 10:15.

Warrant Daily Report: SHFE data showed that on January 20, the total registered warrants for cast aluminium alloy were 69,066 tonnes, down 605 tonnes from the previous trading day. By region: Shanghai's total registered warrants were 4,605  tonne, down 152  tonne; Guangdong's were 23,707  tonne, down 122  tonne; Jiangsu's were 11,777  tonne, down 121  tonne; Zhejiang's were 22,517  tonne, down 210  tonne; Chongqing's were 5,769  tonne, unchanged; Sichuan's were 691  tonne, unchanged.

Industry dynamics: Latest customs data showed that unwrought aluminium alloy imports in December 2025 were 93,100 tonnes, down 11.8 per cent y-o-y but up 27.2 per cent m-o-m. Cumulative imports for January-December 2025 were 1.0073 million tonnes, down 17.0 per cent y-o-y. Unwrought aluminium alloy exports in December 2025 were 25,500 tonnes, up 20.0 per cent y-o-y but down 16.8 per cent m-o-m. Cumulative exports for January-December 2025 were 284,700 tonnes, up 17.5 per cent y-o-y. aluminium scrap: Domestic aluminium scrap imports in December 2025 were approximately 162,800 tonnes, up about 25 per cent y-o-y. By source country, the main sources of aluminium scrap imports in December were Thailand, the UK, Japan, the US, and other countries/regions, with Thailand accounting for 23.3 per cent of total domestic imports.

Aluminium scrap side: On Tuesday, spot primary aluminium prices pulled back compared to the previous trading day, with SMM A00 spot aluminium closing at RMB 23,680 per tonne. The aluminium scrap market followed the decline in primary aluminium prices. Today, baled UBC was quoted in a range of RMB 17,150-17,650 per tonne (ex-tax), while shredded aluminium tensile scrap (priced based on aluminium content) was quoted in a range of RMB 18,900-19,400 per tonne (ex-tax). Prices in Shanghai, Zhejiang, Jiangsu, Tianjin, and Shandong fell by RMB 100-200 per tonne today. On January 20, the price difference between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB  3,510 per tonne, while the price difference between A00 aluminium and shredded aluminium tensile scrap was RMB 2,489 per tonne. The aluminium scrap market is expected to hover at highs this week, with shredded aluminium tensile scrap (priced based on aluminium content) mainly trading in the range of RMB 19,600-20,100 per tonne (tax excluded). The tug-of-war between sellers and buyers continues, and it is necessary to closely track the movement of primary aluminium, the progress of downstream production halts, and pre-holiday trading activity, while remaining vigilant against the risk of a pullback from highs.

Silicon metal side: Prices: The silicon metal market moved sideways. SMM oxygen-blown #553 silicon in east China was quoted at RMB 9,200-9,300 per tonne, and #441 silicon at RMB 9,300-9,500 per tonne, both holding steady from the previous day. On the futures side, the most-traded silicon futures contract traded in the range of RMB 8,600-8,900 per tonne yesterday, with the fluctuation range widening w-o-w. Trading sentiment remained cautious amid weak supply and demand. Market participants are watching for the implementation of production cut plans on the supply side. Production: In mid-January, additional production cuts were implemented at some silicon furnaces in Sichuan and Inner Mongolia. Overall, the operating rate of silicon metal maintained a weak trend in January. Large plants in Xinjiang have batch production cut plans by the end of January, and silicon metal supply is expected to decrease further.

Overseas market: Current overseas ADC12 offers remained firm, holding steady at USD2,860–2,890 per tonne, with import arbitrage profits hovering around RMB 300 per tonne.

Summary: In the spot market, the A00 aluminium price fell by RMB 190 per tonne to RMB 23,680 per tonne yesterday, while the SMM ADC12 price dropped by RMB 50 per tonne to RMB 23,850 per tonne. Aluminium prices declined for the fourth consecutive day. However, supported by limited cost declines due to tight raw material supply, low finished product inventories, and bullish expectations, although manufacturers' offers diverged, most held steady or saw minor adjustments of around RMB 100 per tonne, with overall performance remaining firm. On the demand side, downstream purchases maintained a rigid pace due to fear of high prices and insufficient motivation for pre-holiday stockpiling, resulting in mediocre trading activity. Overall, secondary aluminium alloy prices are expected to continue fluctuating at highs in the short term. While the off-season and high aluminium prices have suppressed market activity, uncertainty regarding regional tax policies and supply tightness caused by environmental protection-driven production restrictions continue to provide a floor for prices.

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.