SMM August 19: Today, the SMM A00 spot aluminum price closed at 23,670 yuan/mt, down another 230 yuan/mt from the previous trading day. China’s aluminum scrap market prices followed the decline overall, with some regions that were on the sidelines yesterday catching up with the decline today. Against the backdrop of continuously climbing primary aluminum prices, aluminum scrap fluctuations were relatively limited, and the price transmission mechanism was hindered. But recently, as primary aluminum has pulled back, the downside resistance of aluminum scrap has provided an opportunity for the narrowing of the price difference between A00 aluminum and aluminum scrap. Additionally, on the supply side, the constraints of the reverse invoicing policy continue, and the scarcity of compliant invoiced aluminum scrap provides bottom support for aluminum scrap prices. Currently, the high-temperature holiday has not yet ended, the operating rate of downstream cast aluminum alloy enterprises remains low, and order recovery still needs time. Scrap utilization enterprises are likely to continue to purchase as needed and adopt a low-inventory strategy, while concentrated restocking remains pending. It is worth noting that currently, the price difference between A00 aluminum and shredded aluminum tense scrap has gradually widened, and the economic advantage of aluminum scrap over primary aluminum has recovered to some extent. It is expected that the short-term aluminum scrap market will continue to move sideways at high levels, with weak end-use demand remaining the core factor suppressing prices.

[ADC12 Daily Price Review: Aluminum Alloy Futures Consolidate and Pull Back, Spot Prices Generally Fall] The ADC12 market price was generally weak today, with most enterprises cutting prices by around 100 yuan/mt, while a few temporarily maintained stability.

[Macro Expectations Repeatedly Disturb, Aluminum Prices Consolidate with Upside Encountering Resistance] Overall assessment: Short-term aluminum prices are expected to mainly consolidate, with upside room somewhat capped by expectations of production resumptions.

[SMM Cast Aluminum Alloy Morning Comment: Night Session Weakens, Cost-Supported Consolidation] Overnight, the Aluminum Alloy 2610 contract opened at 23,025 yuan/mt, reached a high of 23,040 yuan/mt, a low of 22,920 yuan/mt, and closed at 22,965 yuan/mt, down 120 yuan/mt from the previous settlement, a decline of 0.52%.

SMM, August 18: SMM A00 spot aluminum ingot prices closed at 23,900 yuan/mt today, down 170 yuan/mt from the previous trading day. Price adjustments in China’s aluminum scrap market varied, with active adjustments in Shanghai, Zhejiang, Jiangsu, and other regions, while Guizhou, Anhui, Central China, and other areas stayed stable and waited on the sidelines. Against the backdrop of continuously rising primary aluminum prices, aluminum scrap saw relatively limited fluctuations, and the price pass-through mechanism was impeded, mainly constrained by two factors: first, downstream demand for secondary aluminum alloy weakened at the margin. With high-temperature holidays overlapping the traditional consumption off-season, the operating rate of cast aluminum alloy enterprises continued to decline, and order volumes shrank; second, inventories of wrought aluminum alloy scrap raw materials for doors and windows and the like remained high in Henan and other regions, weakening the upside elasticity of aluminum scrap prices. In addition, supply-side constraints from the “reverse invoicing” policy persisted, and the scarcity of compliant aluminum scrap with invoices provided bottom support for aluminum scrap prices. As the high-temperature holiday had not yet ended, downstream cast aluminum alloy enterprises kept operating rates at low levels, and order recovery still needed time. Scrap utilization enterprises were likely to continue purchasing as needed and maintaining low inventories, and a concentrated restocking rally still had to wait. Notably, the price difference between A00 aluminum and shredded aluminum tense scrap has gradually widened, and aluminum scrap’s economic advantage versus primary aluminum has partially recovered. It was expected that in the short term, the aluminum scrap market would continue to move sideways at elevated levels, with weak end-use demand remaining the core factor weighing on prices.

[Record-High U.S. Treasury Yields and Escalating Geopolitical Tensions Disrupt the Macro Environment; SHFE and LME Aluminum Prices Diverge] Overall, in the short term, aluminum prices are expected to consolidate on a strong note, but upside room will be somewhat capped by expectations of resumed production.