Aluminum Alloy Prices Steady Amid Scrap Supply Strain

Key Moments

Futures Performance: Volatility Followed by Range-Bound Trading

During the night session, aluminium alloy 2607 followed a pattern described as “retreat after rapid rise, hovering at lows.” Shortly after the open, prices quickly slid to around 23,180, then rebounded as capital entered the market, briefly pushing the contract to approximately 23,340-23,350. This move brought a short-lived improvement in sentiment.

Selling interest remained strong at higher levels, and prices gradually retreated after reaching the intraday peak. After 23:00, the contract fell back below the average price line and shifted into a lethargic trading phase. Toward the close, prices moved mostly sideways within RMB 23,240-23,270 per tonne and ultimately settled at RMB 23,255 per tonne, slightly lower than the previous settlement.

Spot-Futures Relationship

According to SMM data, on May 12, the theoretical premium of the SMM ADC12 spot price over the most-traded cast aluminium alloy futures contract (AD2606), calculated at the 10:15 closing price, narrowed to RMB 355 per tonne.

SHFE Warrant Inventory Snapshot

SHFE data showed that on May 12, total registered warrants for cast aluminium alloy stood at 33,884 tonnes, an increase of 237 tonnes compared with the prior trading day. Regional inventory details are as follows:

Aluminum Scrap Market: Tight Supply and Cautious Trading

On Tuesday, A00 aluminium prices eased by RMB 10 per tonne from the previous trading day, while overall aluminum scrap pricing remained broadly steady.

Shredded aluminium tense scrap, priced based on aluminium content, traded mainly in the RMB 20,500-21,000 per tonne range (tax-exclusive). Imported zorba at Ningbo Port saw its weekly trading band lifted by RMB 200 per tonne to RMB 21,870-22,070 per tonne (tax-inclusive).

On May 12, the price gap between A00 aluminium and mixed aluminium extrusion scrap free of paint in Foshan was RMB 2,723 per tonne. The spread between A00 aluminium and shredded aluminium tense scrap stood at RMB 2,078 per tonne.

Supply Constraints and Demand Weakness

On the supply side, the tightening of compliant invoice sources intensified, and raw material prices fluctuated sharply. As a result, many aluminium scrap yards were reluctant to sell and were firm on their offers. Elevated LME prices prompted import traders to adopt a cautious approach, and subsequent import volumes are expected to decline.

On the demand side, the traditional off-season, combined with notable issues related to compliant invoices, led some regional enterprises to cut back or suspend production. Wrought aluminium alloy scrap received some backing from operating rates at secondary aluminium plate/sheet and strip producers, but this support was limited.

Downstream buyers focused mainly on rigid-demand purchases and maintained a strong wait-and-see stance. The off-season effect on demand persisted, and secondary aluminium producers downstream remained cautious, largely confining procurement to small-lot restocking to meet essential needs. The divergence between aluminium tense scrap and wrought aluminium alloy scrap continued, order growth stayed constrained, and market participants still needed to be alert to risks from aluminium price volatility and tight supply conditions.

Silicon Metal Prices Stable Across Grades and Regions

On May 12, prices for SMM east China non-oxygen blown #553, oxygen-blown #553, #521, #441, #421, #421 for silicone use, and #3303 all remained unchanged from the previous day. Silicon prices in Kunming, Huangpu Port, Tianjin, Northwest China, Xinjiang, Shanghai, and Sichuan were also steady.

Overseas ADC12 Market: High Offers and Closed Import Window

In markets outside China, import ADC12 offers stayed at a high level of USD 3,320-3,400 per tonne. Instant import losses continued to exceed RMB 3,000 per tonne, leaving the theoretical import window closed.