S&P Global Platts Tuesday assessed spot price of Chinese secondary ADC12 aluminum alloy 

at $1,560-$1,580/mt FOB China, the lowest since June 23, 2009, as oversupply across 

supply chain -- from scrap to cars -- weighed on the market. 

The assessment was down from $1,585-$1,590/mt FOB China a week earlier. Similarly, the 

domestic Chinese aluminum alloy price was assessed lower at Yuan 13,900-14,000/mt ex-

plant ($2,060-$2,074)/mt, down from Yuan 14,400-14,500/mt a week earlier. 

Trades were reported at $1,580/mt CIF Japan ($1,560/mt FOB China) for March loading from 

China. A Japanese trader said $1,600/mt CIF Japan was also tradeable. 

Chinese export trade into Japan, the main Asian market, was lackluster, due to the dollar 

trading at Yen 108- 109, rather than buyers' target of Yen 107, the uncertain outlook for car 

production in Japan for the second quarter, and the London Metal Exchange primary 

aluminum price plunging to $1,755.50/mt Monday, market participants said. The LME cash 

price at $1,755.50/mt was the lowest since January 2017. 

Low LME prices usually drive down those of scrap aluminum feedstock with a knock-on effect 

on ADC12 alloys. "If LME falls to $1,600-$1,700/mt, there may be a shift to primary aluminum 

from scrap," a Japanese smelter source said. 

This  kind  of  substitution  most recently  occurred  in  2015  whe n the  LME  traded in a 

$1,500-$1,700/mt range. Although such a move has not yet been seen so far this year, some 

Japanese market participants pointed out that some scrap feedstock traded higher than the 

alloy products. This suggests that in the near term alloy smelters may be hit by negative 

margins. 

On Tuesday, Japanese 6063 clean extrusion scrap, also known as grade A extrusion scrap, 

was heard trading above Yen 180/kg ($1.66/kg) ex-yard/delivered basis, while ADC12 alloy 

of Chinese origin, for delivery in April, at Yen 170-180/kg ex-warehouse. Grade A 6063-scrap 

is often substituted with primary aluminum. 

Primary aluminum usually trades higher than secondary alloy, but this week, P1020 primary 

metal and the secondary ADC12, both in local warehouses and thus able to meet an 

immediate delivery requirement, traded at Yen 210/kg ex-warehouse. A Japanese trader said 

some Japanese end-users were paying more than Yen 220/kg for ADC12. Secondary 

aluminum alloy prices are typically $200-$300/mt lower than primary, according to LME data. 

It was not yet clear which segment has further to fall -- the primary or secondary, market 

participants also said. 

According to Platts data, US old cast scrap prices fell 29% over July 2018-January 2019, 

while Chinese ADC12 alloy prices fell at a slower pace of 17%. Secondary aluminum prices 

are being weighed down by excess scrap supplies as a result of China restricting scrap 

imports from the US, Japan, the EU and other countries.