China’s Aluminum Scrap Prices Surge Ahead of Holidays: Causes, Impact & Outlook

You know that China celebrates the New Year (Spring Festival) holidays, which often occur from late January to mid-February. The National Golden Day Week is another event which has 7 holidays, its effect is less, but it also affects. These 1–3-week holidays affect many factors, which ultimately cause an increased price of aluminum scrap and other manufacturing industry-related things. This article will provide comprehensive knowledge of why Al scrap prices increase ahead of holidays, their impact and outlook. So, let’s begin.

Aluminum Scrap Market Update

You will get the latest update about the Aluminum scrap market in this section, like the ongoing prices or which type of Al grades have become expensive now.

Latest Price Trends

According to our research, we have noticed a big rise in the prices of aluminum scrap ahead of the Chinese holidays. You will be surprised to know that the price surge for some grades is 10-15%. If we see the history of the prices surge, it is consistent. But now the market pressure is so prominent that this price surge is difficult to handle.

The following table shows showing pre-surge prices of Al then during holidays.

Period	Average Price (RMB/ton)	Key Market Event
October 2023	15,200	Normal market conditions
November 2023	15,800 (+4%)	Pre-holiday stockpiling begins
December 2023	16,500 (+4.4%)	Increased hoarding activity
January 2024	17,300 (+4.8%)	Factories begin holiday shutdowns
Early February 2024	18,100 (+4.6%)	Chinese New Year supply crunch
March 2024	17,600 (-2.8%)	Post-holiday market adjustment

A 12% price surge in the three months leading up to the Chinese New Year. 8% price surge remains after post-holiday management.

Types of Aluminum Scrap Affected

You know that mostly manufacturers work with extrusion scrap, turnings and mixed low-copper scrap, which means the demand is high for these Al scraps. Due to high demand, the price surge is high for these types of aluminum scraps. These types can be reasons behind supply disruptions because they are critical for secondary aluminum production.

Factors Behind the Price Surge

There are many factors which play a role in the price hike during holidays. These factors can be economic, logistical or seasonal. Let’s figure out some critical price surging factors in this section:

Seasonal Shutdowns

During holidays, since labor does not work, that’s why the scrap processors and secondary aluminum scrap smelters shut down operations for weeks.
Due to lower industrial activity, the production of Al scrap reduces, so ultimately an increase in the costs because of the consistent demand.

Reduced Scrap Availability

Scrap availability becomes an issue in Chinese holidays because of many factors:

During holidays, scrap collectors pause scrap collection
The government imposes strict regulations on the scrap melting in pollution-prone regions
The manufacturers stop working on extrusions, turnings, etc., which reduces scrap availability
China’s “Zero Waste Import” policy stops scrap transportation in the country
Logistics disruptions due to weather conditions

Trader Strategy and Demand Pressure

Before holidays, some traders buy extra aluminum scrap and stock it. During holidays, when the aluminum shortage begins, prices rise, and they start to sell it. After the holidays, when prices decrease, they still sell that scrap at a good profit.

Market Impact

The market impact of the Al scrap price surge means how this surge affects a lower-level manufacturer at a factory. In this section, we will discuss how badly the price surge affects the market in China and at the global level.

Domestic Industry Effects

The aluminum scrap price surge has these three effects on domestic industries:

You know what happens first, the price squeeze, like the material costs, is now 10-15% higher than old prices.
During holidays, due to lower material availability, manufacturers pause manufacturing, which ultimately increases product prices.
Due to lower stock availability, small manufacturers shift towards primary Al at higher costs. For instance, a Zhejiang-based auto-parts manufacturer reported 15% lower margins due to price hikes.

Global Market Ripple Effects

During Chinese holidays, due to a shortage of aluminum scrap, international customers may face delays in deliveries and a rise in the product prices.

Sector-wise Reactions

The following table shares the impact of the scrap price surge in 3 different industries, then how these issues are tackled.

Industry	Impact	Response
Construction	Delays in aluminum parts (e.g., frames, cladding)	Use cheaper materials temporarily
Automotive	Higher costs for recycled aluminum parts	Negotiate long-term scrap contracts
Packaging	More expensive cans/bottles	Pass costs to consumers

Outlook

Outlook means how we see future development in China during the price surge:

Short-Term Price Behavior

Prices will increase by 12-15% from pre-holiday times until the full production resumes. Price hike can be even higher for coastal industries due to increased export demand.

Post-Holiday Market Adjustments

Prices will drop slowly, say 3-5% per month, once production resumes completely after the holidays. Unloading of stockpiles will reduce prices further.

Long-Term Forecasts

Here is what can happen in the next two to three years to mitigate that price surge.

Factor	Impact	Projected Trend
China’s Green Policies	Stricter recycling standards	Prices stay 8-12% higher than 2023 averages
Global Scrap Demand	EU/US push for circular economy	China faces more import competition
Energy Costs	High smelting electricity prices	Scrap remains cheaper than primary aluminum

Conclusion

We conclude that the aluminum scrap price surge due to Chinese holidays is an important issue to tackle because it causes issues shortage of scrap and increased Al product prices. Stakeholders need to be prepared for short-term disruptions and explore long-term solutions or policies to mitigate risks in future.

FAQs

Why do aluminum scrap prices rise during the Chinese New Year?

These are the main causes:

Seasonal shutdown of scrap facilities
Reduced supply
Trader stockpiling

Will global aluminum prices be affected by China’s scrap market?

Yes, of course, it will affect the global supply of Aluminum scrap because China plays an important role overall in Al scrap.

What should manufacturers do during such price surges?

Diversify supply sources
Increase inventory buffers
Explore alternative materials