A00 aluminium ingot price marks fourth consecutive drop since the month began: SMM

The A00 aluminium ingot price seems to have decided to be on the downside, according to Shanghai Metals Market. Even continued destocking in social inventories of primary aluminium over the past weeks and improved purchasing enthusiasm among downstream consumers for spot primary aluminium (like it was yesterday in the east China) are failing to pull the ingot price up, except in the interim periods.

Today, on December 7, the ingot price has further extended its plunge by RMB 60 per tonne to stand at RMB 13,500 per tonne, Shanghai Metals Market found. The average prices are expected to range between RMB 13,480 per tonne and RMB 13,520 per tonne, with spot discounts to settle at RMB 20 per tonne. This marks a fourth consecutive drop in A00 aluminium ingot price in China since the month began.

As the decline in ingot price has touched all the major markets in China, markets in the East (Wuxi and Hangzhou) recorded a plunge by RMB 70 per tonne and RMB 85 per tonne to RMB 13,490 per tonne and RMB 13,525 per tonne, respectively. Markets in the south and north, on the other hand, have registered a drop by RMB 40 per tonne and RMB 80 per tonne to stand at RMB 13,600 per tonne and RMB 13,480 per tonne.

Liu Xiaolei, SMM senior analyst said at SMM Al-Si Summit that as consumption grew faster than supply, the inventory destocking cycle across the Chinese aluminium market lasted for an extended period in 2018 and expected to continue in 2019 with broad-based supply cuts.

 Liu expects primary aluminium consumption in China to grow by 4.5 per cent in 2018 and by 3.3 per cent in 2019. SMM data showed that China’s actual consumption of primary aluminium increased by 7.9 per cent in 2016 and by 9.1 per cent in 2017.

In 2018, the estimated growth of primary aluminium output would be at 0.6 per cent and quicken to 3.6 per cent in 2019. Output had expanded by 3.9 per cent in 2016 and 14.2 per cent in 2017.

With waning cost supports, the most traded SHFE aluminium contract is likely to trade at RMB 13,000 per tonne to RMB 14,500 per tonne in the first half of 2019 with its LME counterpart at US$1,850 per tonne to US$ 2,050 per tonne, Liu expects. In the second half of the year, prices are expected to strengthen to RMB 13,500 per tonne to RMB 15,000 per tonne for SHFE aluminium and US$ 1,900 per tonne to US$ 2,100 per tonne for LME aluminium.