China’s aluminium ADC 12 export window opens following gains in MJP market

Key data from Fastmarkets’ aluminium ingot ADC 12 pricing session in China on Wednesday November 30

Aluminium ingot ADC 12, exw dp China, yuan/tonneAluminium ingot ADC 12 spot (MJP), cfr Japan, $/tonne

Key drivers

China’s ADC 12 export window opened in the week to Wednesday, following rapid increases in the main Japanese port (MJP) market. But local prices in China were unchanged amid limited spot activity.
• Prices for aluminium scrap remain well supported by the tight supply of the raw material, which continues to underpin prices for ADC 12. But buying appetite is low and consumers are reluctant to restock due to slow inquiries for the first quarter of next year.
• The traditional end-of-year restocking drive is unlikely to be seen this year, according to market participants. Instead, many end users are likely to start their new year holidays earlier than usual owing to a slowdown in demand amid strict Covid-19 controls across China.
• In Japan, the MJP rose strongly in the week to Wednesday after suppliers raised their offers due to tightness in the spot market. But buying interest declined, leading to slower trading.
• Some restocking did take place in the market last week because end users’ inventory levels had been low amid bearish sentiment. But buyers retreated this week following the price increase.

Key quotes

“Outputs and stock levels at most producers are low, and we’re not ramping up in the near term because of the tightness of scrap. So, the price is unlikely to decrease with limited availability,” – supplier source 1

“There is no momentum for any increases [in price]. Demand in many sectors remains very slow, including the home appliance, tool sectors, etc. And we don’t expect automotive demand to be stronger in the near future,” – producer source 1

“Suppliers are raising their offers and seemingly the export window from China is open, but I haven’t seen much material available,” – trader 1

“Market levels are up, but fewer buyers are being seen at current prices. Production curtailments at automotive companies remain in place and we are not expecting increased demand for ADC 12 before the second quarter of next year,” – trader 2

“Our suppliers are pushing prices up amid resistance from Japanese buyers, and we haven’t had any sales at current levels so far,” – trader 3

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