Highlights

  • LME aluminium alloy was quoted at US$3,000/t on 10 Nov, unchanged on the week and 6.25% lower over a month, while primary aluminium cash rose.
  • No alloy-specific news surfaced; the Illiquid contract is drifting with sluggish die-casting Demand flagged in China's ADC12 market, while primary metal is driven by tight LME stocks.
  • Alloy sits US$137/t under primary cash; watch primary aluminium, China's ADC12 trade and car-parts orders for the next move.

Primary aluminium is jumping around on stock draws and Middle East headlines, but its recycled cousin on the LME has gone quiet and drifted lower.

What happened

LME aluminium alloy was quoted at US$3,000 a tonne on 10 November. The figure was unchanged on the day and on the week, but 6.25% lower than a month earlier.

Primary aluminium went the other way. LME cash settled at US$3,137 a tonne on 10 November, against US$3,055.50 on 9 October, a gain of about 2.7% over the same stretch. That leaves alloy roughly US$137 a tonne below primary cash.

This is a thin market. The stocks series for the alloy contract shows 1,500 tonnes, unchanged across the past year. Flat daily prints and static inventory point to a contract that trades rarely, so each quote carries less information than a primary aluminium settlement.

Why it happened

There has been no fresh news specific to the LME alloy contract this week, so the clearest guide is the parent market and the wider secondary-alloy trade. Alloy is made largely from scrap and sold to die-casters, so its price tends to track primary aluminium with a discount that widens when casting demand is weak.

That demand is soft. In China, the biggest alloy market, end-use demand for ADC12 die-casting alloy is sluggish, with buyers purchasing only what they need. The most-traded Shanghai cast-alloy future fell 1.43% to 22,355 yuan a tonne in the morning session that day.

Overseas ADC12 offers of US$3,050 to US$3,090 a tonne were also reported, with an open Import window into China. Offers in that band sit only slightly above the LME alloy quote, suggesting no shortage outside China either.

Primary metal, by contrast, is being propped up by Scarcity on the exchange. LME aluminium stocks stood at 226,850 tonnes on 10 November, and falling Warehouse stocks widened the premium of near-term metal over three-month metal. Alloy users get none of that squeeze.

The bigger picture still favours sellers. Even after the latest slide, the alloy quote is 19.57% higher since the start of the year, echoing primary aluminium's rally after war damage to Gulf smelters. Emirates Global Aluminium expects its Al Taweelah plant back at full output in the first quarter of 2027, which would ease that support.

How it plays out

The Supply side for alloy is scrap, and scrap remains firm. Relatively firm scrap prices and high production costs are stopping secondary smelters from cutting prices further. That puts a floor under alloy even as demand stays thin.

Winners from the wider discount are die-casters and car-parts makers, who can buy recycled metal more cheaply than primary. Losers are secondary smelters, squeezed between firm scrap costs and buyers who will not chase prices.

Direction will still come from primary aluminium. LME three-month metal hit a three-week low on 10 November on a firmer dollar and hopes of Middle East de-escalation, then rebounded 1.3% to US$3,050 the next day. Market forecasts expect LME aluminium to hold between US$2,950 and US$3,090 in the near term.

Next week, watch whether the alloy quote finally moves off US$3,000, the size of its discount to primary cash, Chinese ADC12 order books and scrap prices. A sustained fall in primary aluminium would likely drag alloy lower too, given how little independent trading supports the contract.