The overseas secondary aluminum market remained under pressure this week as the continued pullback in LME aluminum gradually filtered through to Southeast Asian scrap and ADC12 prices. Most scrap grades in Malaysia and Thailand moved lower, although some premium-grade materials remained relatively resilient due to tight availability. Meanwhile, Southeast Asian ADC12 prices continued to soften amid sluggish automotive and die-casting demand. Rising energy costs in Thailand, however, are providing some support to producers’ cost bases, leaving the market caught between weak downstream demand and elevated production costs. Southeast Asia Scrap Aluminum Prices Fall, but Premium Grades Remain Resilient Southeast Asian aluminum scrap prices generally moved lower this week. In Malaysia, Talon averaged MYR 13,250/mt (approximately $3,280/mt) , down 3.64% week-on-week. Tense fell to $2,650/mt , down 4.50% WoW. In contrast, used beverage cans (UBC) edged higher to MYR 10,125/mt (approximately $2,507/mt) , up 0.75% WoW. In Thailand, Talon declined to THB 109,000/mt (approximately $3,335/mt) , down 1.36% WoW, while UBC fell to THB 82,000/mt (approximately $2,510/mt) , down 2.38% WoW. As LME aluminum continued to retreat from its recent highs, buyers lowered their target prices and became increasingly cautious about restocking. Some scrap grades that had previously resisted the decline began to catch up with the broader market, with Malaysian Tense recording the largest weekly decline among the assessed grades. However, the performance of Malaysian UBC highlights the continued divergence between different scrap categories. Premium-grade scrap remains relatively tight, particularly UBC and 6063 extrusion scrap, limiting suppliers’ willingness to make aggressive price concessions. As a result, the decline in LME aluminum is increasingly being transmitted to the scrap market, but premium-grade scrap continues to show greater price resilience than ordinary mixed scrap. Southeast Asia ADC12 Prices Edge Lower as Demand Remains Weak The Southeast Asian ADC12 market remained soft this week, with prices declining in both Malaysia and Thailand. Malaysia’s domestic ADC12 price fell to MYR 12.45/kg (approximately $3,082/mt) , down 0.40% WoW, while FOB Port Klang prices declined to $3,090/mt , down 0.48%. In Thailand, domestic ADC12 prices fell to THB 102.5/kg (approximately $3,137/mt) , down 0.97% WoW. FOB Laem Chabang prices slipped to around $3,070/mt , down 0.16%. According to SMM’s recent discussions with Thai producers, export offers are currently concentrated at around $3,050–3,090/mt . Some producers have lowered their offers following the decline in LME aluminum, although overall adjustments remain relatively cautious. Demand remains the primary source of pressure. Southeast Asia is still in the traditional seasonal lull, with automotive and die-casting orders recovering slowly. Downstream buyers continue to purchase largely on a hand-to-mouth basis, with little indication of aggressive restocking. At the same time, production costs remain elevated. Market participants in Thailand reported that natural gas prices have recently risen significantly, with some producers indicating increases of around 40–50% . Higher energy costs are increasing secondary aluminum production costs and limiting producers’ ability to aggressively cut ADC12 prices even as LME and some scrap prices decline. The ADC12 market therefore remains caught between downstream pressure for lower prices and production costs providing a floor . Low-Priced Alloy Ingot Supply Adds Pressure to Asian Market Another development attracting market attention is the increasing availability of competitively priced casting alloy ingots from Africa, Vietnam and other regions. According to SMM’s recent market discussions, some African-origin ADC12 or similar casting alloy ingots have been indicated at around $2,850/mt , significantly below mainstream Southeast Asian ADC12 offers of approximately $3,050–3,090/mt. Against the backdrop of falling LME aluminum prices and weak downstream demand, these lower-priced materials are influencing buyers’ price expectations and providing additional bargaining leverage when negotiating with Southeast Asian suppliers. However, price is not the only consideration. Feedback from market participants suggests that some low-priced imported alloy ingots have shown greater variation in chemical composition and inconsistent quality , limiting their suitability for customers with stricter production requirements. For automotive components and die-casting applications, where alloy consistency is particularly important, buyers continue to consider product quality, stable supply and long-term reliability alongside price. The Asian ADC12 market is therefore showing increasing price and quality segmentation , with lower-priced material pressuring market sentiment while higher-quality, specification-consistent ADC12 retains some premium. LME Aluminum Falls Further as Supply Risk Premium Unwinds LME aluminum continued to decline this week. From August 17 to August 20, LME cash aluminum fell from around $3,272/mt to $3,182/mt , a cumulative decline of approximately $90/mt . One factor behind the decline is the continued unwinding of the supply risk premium associated with disruptions in the Middle East. Emirates Global Aluminium’s Al Taweelah smelter continues to restart production. Around 18% of the smelter’s pots have resumed operations , while all three potlines have been re-energised. Production is expected to return to pre-disruption hot-metal levels in the first quarter of 2027. As the restart path becomes clearer, market concerns over a prolonged disruption to Gulf aluminum supply have eased. Alternative logistics routes have also allowed some material and raw-material flows to continue, while increased aluminum exports from China, Indonesia and other Asian suppliers are helping offset part of the disruption to Gulf supply. Meanwhile, signs of easing spot tightness have emerged. The LME cash-to-three-month spread has moved from backwardation toward a slight contango, suggesting that concerns over immediate physical availability have eased at the margin. More importantly, however, downstream demand has failed to keep pace with the earlier rally in aluminum prices . SMM’s recent discussions with market participants indicate that buyers generally did not chase prices higher during the previous rally. Once LME began to decline, purchasing targets were quickly revised downward. This helps explain a view increasingly expressed by market participants that prices have recently been “falling faster than they rise.” Supply Risks Ease, but the Market Has Not Shifted Into Oversupply Despite the recent decline in LME aluminum, the global primary aluminum market should not yet be interpreted as having shifted decisively from tightness into oversupply. Only around 18% of Al Taweelah’s pots have restarted, while a full recovery to pre-disruption production levels is not expected until the first quarter of 2027. Other overseas restart and new capacity projects are also progressing, but the pace of actual supply recovery has yet to accelerate significantly. Some projects continue to ramp up more slowly than previously expected. Inventories also remain supportive. LME aluminum inventories are currently around 247,000 mt , remaining at relatively low levels. The recent LME decline therefore appears to reflect a combination of the unwinding of extreme supply risk premiums, easing near-term spot tightness and renewed focus on weak demand , rather than a fundamental shift toward substantial global primary aluminum oversupply. Low inventories and the gradual pace of overseas supply recovery continue to provide downside support. Outlook SMM expects the overseas secondary aluminum market to remain soft and range-bound in the near term, with increasing divergence between different products and grades . For aluminum scrap, further weakness in LME prices could continue to pressure Tense, Talon and other conventional scrap grades. However, premium materials such as UBC and 6063 extrusion scrap remain relatively tight, which should allow them to maintain stronger price resilience. If LME declines faster than premium scrap prices, their price-to-LME ratios could remain elevated or even rise temporarily. For ADC12, weak downstream demand remains the key constraint. Buyers are becoming increasingly aggressive in negotiations as LME declines, but rising energy costs in Thailand and relatively firm premium-grade scrap prices are limiting producers’ room for substantial further reductions. Lower-priced alloy ingots from Africa, Russia and other origins will also require close attention. If offers around $2,850/mt become more widely available, they could further pressure Asian buyers’ price expectations. However, differences in quality and chemical consistency mean that their impact on mainstream high-quality ADC12 could remain uneven. For LME aluminum, further unwinding of the Middle East supply risk premium may continue to limit upside potential. Nevertheless, EGA’s recovery remains incomplete, other overseas supply has yet to accelerate significantly, and inventories remain low, leaving fundamental support on the downside. Overall, the market’s key question is increasingly shifting from “Will supply be disrupted?” to “Can real demand absorb supply as production gradually recovers?” Going forward, market participants should closely monitor LME price and inventory structures, the actual pace of EGA and other overseas restarts, Thai natural gas and production costs, Southeast Asian UBC and 6063 scrap availability, flows of lower-priced African and Russian alloy ingots, and the recovery of automotive and die-casting orders across Asia .

SMM, August 21: US-based critical minerals refiner Nth Cycle has been selected by the US Department of Energy to enter award negotiations for up to $100 million in funding to build a commercial-scale black mass refining facility, Project Shield, in the southeastern US one of the first of its kind domestically. The facility will refine up to 24,000 t/y of domestic black mass, the material recovered from shredded spent lithium-ion batteries, into high-purity nickel MHP and battery-grade lithium carbonate using Nth Cycle's proprietary OYSTER electroextraction system. The award addresses a structural gap in US recycling capacity: following the US Department of Commerce's recent one-year export ban on black mass, insufficient domestic refining has left China dominant in its processing. Nth Cycle already holds a ten-year offtake term sheet with Trafigura for 2,000 t of contained nickel and 1,500 t of lithium carbonate, adding to its existing Ohio operations. Project Shield is targeted for 2029, aided by a modular build model roughly 70% less capital-intensive than traditional refineries. SMM View: DOE backing for Nth Cycle reflects growing US urgency to build domestic lithium and nickel recycling capacity independent of Chinese midstream processing, with the black mass export ban tightening feedstock supply at home and locked-in offtake demand strengthening the case for battery recycling as a key pillar of western raw material security.

On August 2st, Sydney-listed Elevra Lithium has secured a price-floor supply agreement to deliver spodumene concentrate from its Québec project to Mangrove Lithium's planned conversion facility in Canada, as North American players move to build out domestic lithium processing capacity. Under the agreement, Elevra will supply 100% of the feedstock required for Mangrove's 20,000 tonne-per-year lithium carbonate-equivalent conversion plant. The deal includes a price floor set above Elevra's expected production cost, with no ceiling on the upside, though the contract value was not disclosed. The Mangrove facility remains subject to a final investment decision, with additional funding support expected from Export Development Canada and the Canada Growth Fund, according to Mangrove Chief Commercial and Strategy Officer Annie Liu. Liu noted that floor-price offtake structures are becoming increasingly standard across the hard-rock lithium supply chain, citing long asset development lead times and sustained demand for spodumene feedstock. A similar structure was adopted in February when Australia's PLS Group signed a floor-priced spodumene concentrate offtake agreement with a Chinese converter. SMM View: The Elevra-Mangrove agreement reflects growing use of price-floor mechanisms to underpin new spodumene supply contracts, providing upstream producers with cost-cover certainty against continued lithium price volatility while securing dedicated feedstock for new North American conversion capacity. As more western processing projects reach final investment decision, similar floor-price offtake structures may become a standard feature of non-China-aligned spodumene supply chains, with implications for how feedstock is contracted and priced globally.

【Nth Cycle to Go Public via SPAC Merger, Expanding U.S. Black Mass Refining】 U.S. critical minerals refiner Nth Cycle has entered into a definitive business combination agreement with Kensington Capital Acquisition Corp. VI, with the combined company expected to list on the New York Stock Exchange at an implied enterprise value of approximately $585 million. Nth Cycle’s OYSTER electrochemical refining platform processes black mass from end-of-life lithium-ion batteries and battery manufacturing scrap to recover critical materials including nickel and lithium. The transaction is expected to support the company’s expansion of domestic critical mineral and battery material refining capabilities in the U.S.

SMM Analysis: Recently, the London Metal Exchange (LME) copper market saw a sudden short squeeze. Copper prices shot up, nearing record highs, and the premium (Back) of LME spot prices against the 3M contract once widened to the highest level in nearly five years...

SMM expects the most-traded SHFE lead contract to mainly trade in the range of 15,500-16,200 yuan/mt, and the implementation of maintenance at primary lead enterprises in mid-to-late August is expected to drive prices to bottom out and rebound, but consumption will cap upside room. Overall, lead price performance in August is better than in July, and the willingness of overseas lead ingot inflows into China is improving MoM.