Aluminium inventories in China drop by 6,000 tonnes and so the price of A00 aluminium ingot by RMB40/t

Shanghai Metals Market found social inventories of primary aluminium further inched down by 6,000 tonnes on Monday, July 8, across eight major consumption areas in China, including SHFE warrants. The inventories are thus standing at 1.022 million tonnes compared to 1.028 million tonnes on Thursday, July 4. Week-on-week, the inventories dropped 29,000 tonnes from 1.051 on June 27, 2019.

Production cut at aluminium smelters and weaker arrivals at warehouses have been consistently dragging down the inventories. Since June 3 until now, the inventories recorded decreases by over 155,000 tonnes, found SMM data.

On July 8, the inventories in Wuxi, Jiangsu; Shanghai; and Gongyi, Henan dropped 6,000 tonnes, 3,000 tonnes, and 2,000 tonnes to stand at 329,000 tonnes, 204,000 tonnes, and 105,000 tonnes. While in some other markets like Hangzhou, Zhejiang; Linyi, Shandong; Chongqing; and Tianjin, the inventories increased by 1,000 tonnes and 2,000 tonnes to stand at 64,000 tonnes, 11,000 tonnes, 23,000 tonnes, and 55,000 tonnes, respectively.

 However, on the other hand, the continued decline in primary aluminium inventories as of today did not raise the price of A00 aluminium ingot. The latter rather dropped by RMB 40 per tonne to RMB 13,770 per tonne, according to Shanghai Metals Market. On July 4 and 5, the ingot price had increased from RMB 13,620 per tonne to RMB 13,735 and to RMB 13,785 per tonne but could not rebound to the price RMB 14,105 per tonne and RMB 14,115 per tonne in the same period last month. Hence, the overall trend of the ingot price remained sluggish over the months, primarily due to incessant bearish sentiment in alumina spot price and low demand for primary aluminium among downstream consumers.

The average prices today are expected to range between RMB 13,750 per tonne and RMB 13,790 per tonne, with spot contract to be traded at a discount and premium price of RMB 20 per tonne.