Domestic aluminium scrap prices continued to climb this week, with single-day adjustments in some regions reaching RMB 300 per tonne. As of September 4, the SMM A00 price closed at RMB 20,860 per tonne, up RMB 250 per tonne w-o-w.
Supply in the aluminium scrap market remained tight, particularly for aluminium tensile scrap resources, where prices stayed firm, with mainstream offers excluding tax hovering between RMB 17,300-17,800 per tonne. Baled UBC prices, supported by rigid demand, fluctuated within the range of RMB 15,650-16,150 per tonne.
Regional trends diverged; since September, Jiangxi and Hunan significantly raised recycling prices due to supply tightness, with cumulative increases of RMB 400 per tonne, while east and central China mostly adjusted in line with aluminium price gains.
Operating rates at downstream secondary aluminium enterprises rebounded mildly, but the peak season demand characteristics of "September peak season" have not fully materialised, resulting in a supply-demand mismatch in the market. Aluminium scrap prices are expected to hover at highs next week, with intensified negotiations between sellers and buyers.
From a macro perspective, the cleanup of irregular tax rebates across regions continues. Although policies are still in a transition period and current purchasing offers do not yet reflect their impact, medium and long-term, scrap utilisation enterprises may bargain down purchasing prices to pass on rising tax costs, posing a downside risk to aluminium scrap prices.
On the other hand, the tight supply situation is unlikely to improve in the short term, particularly for shredded aluminium tensile scrap, which will continue to give suppliers bargaining power. SMM expects the mainstream range for shredded aluminium tensile scrap (including moisture) to fluctuate around RMB 17,300-17,800 per tonne, while baled UBC prices will hover between RMB 15,600-16,100 per tonne.
The market needs to closely monitor the implementation progress of tax policies and the actual recovery of downstream consumption, as price trends will depend on the balance between cost transmission and supply tightness.
This week, cast aluminium alloy futures fluctuated upward, with the most-traded 2511 contract closing at RMB 20,475 per tonne on Thursday. In the spot market, ADC12 prices continued to hold up well. As of September 11, the SMM survey quoted the price at RMB 20,950 per tonne, up RMB 200 per tonne w-o-w, maintaining a premium of RMB 500 per tonne against the most-traded contract.
Cost support strengthened significantly. Due to tight domestic and overseas aluminium scrap circulation resources and increased demand from scrap utilisation enterprises, the aluminium scrap market shortage intensified, with hoarding pushing prices up rapidly.
To ensure order delivery, some manufacturers made high-priced or even cross-regional purchases. Rising costs further boosted ADC12 prices and maintained its premium over A00 aluminium. Demand side, downstream procurement sentiment recovered slightly since September, with demand continuing to rebound, but the actual strength of the traditional peak season remains to be verified.
Facing dual pressures of raw material shortages and low finished product inventories, some secondary aluminium enterprises became more cautious in taking orders, even intentionally controlling order sizes to avoid falling into a "more production, more losses" dilemma.
Supply side, the SMM survey showed that the operating rate of leading secondary aluminium enterprises rose slightly by 0.3 percentage points w-o-w to 53.5per cent, mainly driven by improved consumption. However, the industry overall is still constrained by insufficient raw material supply and policy uncertainties.
In the import market, overseas ADC12 offers rose slightly by USD10per tonne to USD2,500–2,530per tonne, while domestic spot prices traded at RMB 20,100–20,300 per tonne, up RMB 100 per tonne over the week. Affected by the stronger RMB exchange rate, the immediate import loss narrowed to within RMB 200 per tonne.
Overall, ADC12 prices are expected to continue fluctuating at highs in the short term, supported by costs, but limited demand recovery and increasing social inventory will still cap upside room. Follow-up focus should be on raw material supply conditions, demand recovery progress, and potential policy impacts on the market.
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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