Domestic aluminium scrap prices generally hovered at highs this week. At the beginning of the week, driven by the weakening of primary aluminium prices, some aluminium scrap varieties pulled back slightly. As of September 25, the SMM A00 aluminium price closed at RMB 20,770 per tonne, down RMB 10 per tonne w-o-w.
Shredded aluminium tensile scrap remained tight, with mainstream quotations ranging between RMB17,200-17,800 per tonne (including moisture); baled UBC prices mainly fluctuated within the range of RMB 15,500-16,100 per tonne, with a slight pullback in the trading range.
Regional performance diverged: aluminium tense scrap quotations in areas such as Anhui declined, while enterprises in Henan, Jiangxi, and Shandong were relatively active in shipments from storage yards due to pre-holiday stocking demand for the National Day holiday.
On the downstream side, the operating rate of secondary aluminium enterprises rebounded mildly, but the traditional peak season demand in September fell short of expectations. Mid-week, market activities in Guangdong were temporarily suspended due to Typhoon "Hagibis," but normal receiving, shipping, and production activities have now resumed.
Aluminium scrap prices are expected to continue fluctuating at highs next week. On one hand, the tight supply fundamentals of aluminium scrap are difficult to alleviate in the short term, and the supporting effect of downstream pre-holiday stocking demand on prices continues to develop.
On the other hand, no further implementation feedback has been received regarding the domestic tax cleanup policy, but in the long term, scrap utilisation enterprises still harbour intentions to drive down prices. Overall, the mainstream price range for shredded aluminium tensile scrap (including moisture) is expected to hover around RMB 17,300-17,800 per tonne, while baled UBC prices are likely to linger near RMB 16,100-15,600 per tonne.
The market needs to closely monitor the sustainability of downstream stocking demand before the National Day holiday, the actual implementation pace of the tax policy, and further guidance from primary aluminium price trends.
This week, cast aluminium alloy futures showed a V-shaped trend of falling first and then rising, with the most-traded AD2512 contract closing at RMB 20,380 per tonne on Thursday.
In the spot market, ADC12 prices declined initially before rising, fluctuating in a range-bound overall. As of September 25, the SMM price was quoted at RMB 20,900 per tonne, down RMB 50 per tonne w-o-w, at a premium of RMB 495 per tonne against the most-traded contract.
On the cost side, pre-holiday raw material stocking demand from secondary aluminium plants was constrained by tight aluminium scrap supply, highlighting procurement pressure. Demand side, as the National Day and Mid-Autumn Festival holidays coincided this year, downstream die-casting enterprises extended their holiday breaks by 1–2 days YoY, with most enterprises taking 3–8 days off (a few maintained production). Although pre-holiday stocking demand boosted transactions for manufacturers and traders, the overall increase was limited.
Supply side, the operating rate of leading secondary aluminium enterprises rose 0.7 percentage points w-o-w to 56.6per cent. Currently, large enterprises are seeing steady to rising orders and actively delivering them, driving up the operating rate. However, Typhoon Hagibis led to the "five suspensions" in Guangdong, causing local enterprises to halt production for 1–3 days and dragging down the regional operating rate. Production and logistics resumed order by the afternoon of the 24th.
With the dual holidays, production arrangements in the secondary aluminium industry are diverging next week: some manufacturers plan to maintain production without stoppages; some enterprises intend to take about 3 days off; others have yet to finalise specific holiday plans, pending further clarification based on downstream customer demand and order situations.
Overall, holiday factors are expected to impact industry production pace, and the overall operating rate of the secondary aluminium industry is projected to experience a phased pullback next week.
On the inventory side, according to SMM statistics, the social inventory of secondary aluminium alloy ingots in mainstream consumption areas was 55,700 tonnes on September 25, up 400 tonnes w-o-w, continuing a weak inventory buildup trend.
On Monday, SHFE officially launched the warrant generation business for cast aluminium alloy futures. As of September 25, cast aluminium alloy futures standard warrants had been issued for 19,181 tonnes, laying the foundation for the smooth implementation of the first contract AD2511’s expiration and delivery in November. However, caution is warranted: if warrants continue to increase significantly in the future, it may intensify delivery pressure and weigh on futures.
Overall, cost support from aluminium scrap and pre-holiday stocking demand provides a floor for ADC12 prices, but extended downstream holidays, limited restocking increments, and persistent inventory buildup constrain upside potential. ADC12 prices are expected to fluctuate within a range next week, with close attention needed on raw material availability, holiday inventory accumulation, and post-holiday demand recovery.
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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