Chinese Aluminum Scrap Market Overview (May 21)

On May 21, the SMM A00 spot aluminum price fell sharply by 220 yuan/mt from the previous trading day, closing at 20,480 yuan/mt. This downward trend immediately impacted the aluminum scrap market, causing prices for many major scrap types to decline. Most notably, prices for baled Used Beverage Cans (UBC) dropped by 100 yuan/mt.

Specifically, clean aluminum scrap prices in the East China market fell by 100 yuan/mt. In the South China market, prices for 6-series new aluminum scrap and aluminum wire scrap also recorded a similar decrease of 100 yuan/mt. This widespread decline indicates growing pressure across the entire aluminum supply chain.

Detailed Analysis of the Price Drop

The primary reason behind this decline is weak downstream consumption. Aluminum processing companies are facing a drop in new orders, and inventories of finished products like aluminum billets and aluminum round bars remain high. This has made them very cautious about purchasing raw materials, including aluminum scrap.

On the other hand, scrap holders are reluctant to sell at the current low prices because their inventory costs are still high. This tug-of-war between buyers and sellers has created a stalemate in the market, with low actual transaction volumes. Aluminum scrap recycling plants, which produce a variety of products from standard aluminum plates and aluminum coils to specialized checkered plates, are facing dual pressures from input costs and weak output demand.

In the secondary aluminum alloy market, prices for ADC12 alloy remained stable, but transactions were poor. Downstream die-casting plants have few orders, leading to weak demand for ADC12.

Market Outlook

With spot aluminum prices continuing to fluctuate and no clear signs of improvement in downstream demand, aluminum scrap prices are expected to remain weak in the short term. The market is likely to maintain its stalemate until there are more positive signals from consumption demand or a change in companies' inventory policies.