Aluminum Price Decline Post-Holiday: Market Dynamics and Strategic Implications
Following the recent holiday period, aluminum markets experienced notable price declines across primary and secondary segments. The Shanghai Futures Exchange (SHFE) aluminum contract fell by 210 yuan/metric ton (mt) to 19,850 yuan/mt, while domestic ADC12 secondary aluminum prices dropped 100 yuan/mt to 20,300–20,500 yuan/mt. Imported ADC12 prices also saw slight reductions, with overseas quotations at $2,420–2,440/mt and import losses narrowing to approximately 600 yuan/mt. This report analyzes the drivers of this decline, compares primary and secondary market behaviors, and provides actionable insights for procurement strategies amid ongoing volatility as aluminum prices fluctuate downward after holiday.
Why Are Aluminum Prices Declining After the Holiday?
Recent Trends in Aluminum Pricing
The immediate post-holiday period revealed sustained downward pressure on aluminum prices. SHFE aluminum futures opened lower, reflecting weakened sentiment among traders and manufacturers. Seasonal demand lulls are typical after major holidays, as downstream industries delay restocking amid uncertain consumption forecasts. Historical data from the Shanghai Metal Market (SMM) indicates that aluminum prices often decline by 1–3% in the first week following extended breaks, aligning with the current 1.05% drop in SHFE prices. For a broader perspective on how these changes fit into wider market contexts, examining global commodities insights can provide valuable context.
Key Aluminum Price Metrics Following the Holiday (Table)
| Pricing Index | Recent Price | Decline from Previous Trading Day |
|---|---|---|
| SHFE Aluminum | 19,850 yuan/mt | â–¼210 yuan/mt |
| Domestic ADC12 | 20,300–20,500 yuan/mt | ▼100 yuan/mt |
| Imported ADC12 (Overseas Prices in USD) | $2,420–2,440/mt | Slight decrease |
| Import Margin Status | Approx. -600 yuan (loss) | Improved slightly (less negative) |
Factors Fueling Aluminum Market Volatility
Sluggish downstream demand persists as construction and automotive sectors—which account for 60% of aluminum consumption—delay orders amid economic headwinds. Producers report inventory accumulation, with smelters holding 15–20% higher stockpiles compared to pre-holiday levels. Concurrently, cautious buying behavior has reduced spot market transactions by 30% month-over-month, exacerbating price fragility. China's stimulus impact on resource markets also plays a significant role in these fluctuations.
How Do Secondary Aluminum Prices Compare?
Distinguishing Primary vs. Secondary Aluminum Markets
Primary aluminum (A00) and secondary aluminum (ADC12) markets exhibit divergent pricing dynamics due to distinct supply chains. Secondary aluminum, derived from scrap, typically trades at a 2–5% discount to primary aluminum. However, the current spread has narrowed to 2.3% (20,300–20,500 yuan/mt for ADC12 vs. 19,850 yuan/mt for A00), reflecting tighter scrap availability.
| Aluminum Market Segment | Current Rate (yuan/mt) | Price Movement |
|---|---|---|
| Primary Aluminum (A00) | 19,850 | â–¼210 yuan |
| Secondary Aluminum (ADC12) | 20,300–20,500 | ▼100 yuan |
Demand Patterns Impacting Secondary Aluminum Prices
Die-casting enterprises, the primary consumers of ADC12, have reduced procurement volumes by 25% compared to Q1 2025, citing uncertain export orders. This hesitancy stems from global manufacturing PMI contractions, particularly in key markets like the EU and North America.
What Industry Dynamics Influence Aluminum Pricing?
Seasonal and Economic Factors
Post-holiday price corrections are compounded by macroeconomic pressures, including rising energy costs and currency fluctuations. The yuan's 4% depreciation against the dollar since January 2025 has increased aluminum production costs by 8–10% for imported bauxite-reliant smelters. This phenomenon is part of broader market behaviors that affect various commodities, which is why understanding market dynamics is essential for investors in this sector.
Import Aluminum Dynamics and Market Profitability
Despite narrowed losses, imported aluminum remains unprofitable, with smelters absorbing 600 yuan/mt deficits. This imbalance discourages imports, creating upward pressure on domestic prices once destocking concludes. Meanwhile, innovative approaches like Rio Tinto's low‑carbon aluminium project in Finland may influence future market premiums for sustainable products.
Expert Insights and Market Perspectives
Industry analysts anticipate prolonged softness in aluminum prices, with SMM forecasting a 3–5% decline in Q2 2025 if downstream demand fails to recover. "The combination of high inventories and muted industrial activity suggests prices may test 19,000 yuan/mt before stabilizing," notes an SMM market strategist. According to recent aluminum price trend analysis, fundamental weaknesses make it difficult to sustain upward momentum.
How Should Businesses Adjust Aluminum Procurement Strategies?
Firms are advised to:
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Limit spot purchases to 50–60% of typical volumes until price trends clarify.
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Hedge 30–40% of Q3 2025 requirements via SHFE futures.
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Diversify suppliers to include secondary aluminum producers offering 20,300–20,500 yuan/mt rates.
For investors looking at the sector more broadly, a comprehensive mining stocks guide can provide valuable insights into incorporating aluminum producers into investment portfolios.
Aluminum Pricing Outlook: What to Expect Next?
Short-term forecasts remain bearish, with technical analysis suggesting support at 19,500 yuan/mt for SHFE aluminum. A recovery above 20,200 yuan/mt would require manufacturing PMI improvements above 50.0 and inventory drawdowns exceeding 8%. According to Trading Economics data, aluminum prices have shown volatility throughout recent months as global economic factors continue to influence commodities markets.
Conclusion & Key Takeaways
The aluminum market's post-holiday decline reflects cyclical demand weakness and global economic uncertainty. Procurement managers should prioritize flexible contracting and real-time SMM price tracking to navigate ongoing volatility. Secondary aluminum markets present near-term cost advantages, though primary aluminum's liquidity remains critical for large-volume buyers. As aluminum prices fluctuate downward after holiday periods, market participants must remain vigilant to capitalize on potential opportunities amid the challenges.
Further Exploration:
For real-time pricing data and historical trends, consult SMM's aluminum market tools at hq.smm.cn.
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