1. Report Industry Investment Rating No information provided. 2. Core Viewpoints of the Report - In 2024, China's total scrap aluminum recycling volume was 11.06 million tons, a year-on-year increase of 8.1%. The supply growth rate of old scrap aluminum was 11.6%, and that of new scrap aluminum was 1.6%. It is estimated that the growth rate of scrap aluminum supply will decline to 1.9% and 4.5% in 2026 and 2027 respectively [2][37]. - China's annual primary aluminum production is about 43.5 million tons. After rough calculation based on the recycling rate, scrap aluminum accounts for 18.5% of the total aluminum supply. To meet a 1% growth in consumption, the scrap aluminum supply growth rate needs to reach at least 5.5%. With limited primary aluminum supply, the increment of new scrap aluminum supply is scarce. It is expected that the increment of new scrap aluminum supply in 2025 will be 1%, so old scrap aluminum needs to achieve a growth rate of over 7.5%. Therefore, the tight supply situation of scrap aluminum will be difficult to ease in the next two years [2][9][37]. - The price of scrap aluminum remains high, and the price difference between refined and scrap aluminum continues to decline. In addition, the price of industrial silicon has dropped significantly. Even when producing with primary aluminum and adding 11% industrial silicon, its production cost - effectiveness is gradually emerging. If the scrap aluminum price remains high, there is a possibility of primary aluminum replacing scrap aluminum in the later stage, which can be used as a reference for arbitrage of the price difference between A00 and ADC12 [2][28][37]. - In Q2 2022, due to factors such as the geopolitical crisis and the Fed's interest - rate hikes, the A00 aluminum price dropped significantly due to recession trading factors. As a result, the ADC12 - A00 price difference showed abnormal seasonal performance. From 2023 to the current position in 2025, the ADC12 - A00 price difference has shown regular seasonal fluctuations [3][31][38]. - The ADC12 - A00 price difference can be simply understood as the aluminum ingot basis or the aluminum ingot spot premium or discount. ADC12 is more focused on cost and actual supply - demand strength, while the A00 aluminum ingot is more affected by macro factors. When the inventory is low and actual consumption strengthens, the ADC12 price is firm, and the A00 spot premium rises. When the inventory is high, even if consumption is strong, the ADC12 price and the A00 spot premium situation will not be optimistic [3][32][38]. 3. Summary by Relevant Catalogs 3.1 Cost - side Analysis of ADC12 Price 3.1.1 Insufficient Increment of Scrap Aluminum Supply in the Next Two Years - The domestic scrap aluminum market supply is tight. Although the scrap aluminum supply is increasing, the procurement sources for aluminum alloy plants are decreasing due to the promotion of scrap aluminum grade - preserving recycling. The theoretical calculation shows that the scrap aluminum supply growth rate will decline in the next two years, posing challenges to cost control and raw - material channels for aluminum alloy manufacturers [7]. - The slowdown in scrap aluminum supply growth in the next two years is mainly due to factors such as China not entering the real - estate aluminum recycling period yet, the slowdown in scrap aluminum recycling from electronic and durable goods due to the impact of the epidemic, and the decline in scrap aluminum supply from transportation and machinery equipment caused by the previous slowdown in consumption growth. However, the actual scrap aluminum recovery volume from automobiles may be slightly better than the theoretical value due to the rapid development of new energy and government subsidies [7][8]. 3.1.2 Increased Procurement Difficulty for Aluminum Alloy Plants due to the Promotion of Scrap Aluminum Grade - Preserving Recycling - In the past, most of China's recycled aluminum could only be used for die - casting aluminum at a downgraded level. In 2024, the use of scrap aluminum in aluminum profiles and strips increased significantly, indicating that the mature aluminum in old scrap aluminum is being used at the original grade. Even though the scrap aluminum supply is increasing, the raw - material procurement for recycled alloy enterprises is becoming more difficult, and the price difference between refined and scrap aluminum is narrowing [11]. 3.1.3 Analysis of the Relationship between Scrap Aluminum Price and ADC12 Price - The correlation coefficient between scrap aluminum price and ADC12 price is 0.91, and that between A00 and ADC12 price is 0.96. Scrap aluminum price affects ADC12 price mainly from the cost side, while the relationship between A00 and ADC12 is more about output and price correlation [16]. - The scrap aluminum price is affected by the primary aluminum price, but in a tight supply situation, scrap aluminum traders may hold back goods when the primary aluminum price drops. Seasonally, the scrap aluminum price is relatively stronger than the primary aluminum price around the Spring Festival. It is expected that the price difference between refined and scrap aluminum will remain at a low level in the next two years [16]. 3.2 Analysis of the Price Difference between ADC12 and A00 3.2.1 Analysis from the Perspective of the Price Difference between Refined and Scrap Aluminum - The current theoretical production cost of ADC12 is about 20,150 yuan/ton, and the industry is facing a slight loss. With the high scrap aluminum price and the narrowing price difference between refined and scrap aluminum, as well as the significant decline in the industrial silicon price, there is a possibility of primary aluminum replacing scrap aluminum if the scrap aluminum price remains high, which can be used as a reference for arbitrage of the price difference between A00 and ADC12 [26][28]. 3.2.2 Analysis from the Perspective of Consumption Seasonality - In 2022 Q2, the ADC12 - A00 price difference showed abnormal seasonal performance, while from 2023 to the current position in 2025, it has shown regular seasonal fluctuations. Around the Spring Festival, the high cost of scrap aluminum supports the ADC12 price, making the ADC12 - A00 price difference relatively high at the beginning and end of the year. In Q2, due to sufficient supply after the Spring Festival inventory accumulation and the influence of macro factors on A00, the ADC12 - A00 price difference weakens. From August to September, as consumption strengthens and supply becomes relatively insufficient, the ADC12 - A00 price difference gradually strengthens [31].