Aluminium market view for the week ending April 19, 2013

LME three months prices dipped below $ 1,850/t in mid-April, before short-covering moved the price back up towards $1,900/t. Commodities markets have been underperforming other asset classes this year, and the latest data out of China delivered another unpleasant surprise which sent commodity prices lower. China GDP in Q1 showed an unexpected deceleration in pace to 7.7% (from 7.9% y-o-y in Q4 2012). One factor behind the slowdown was the new government frugality and anti-bribery campaigns, which hit retails sales. However, high levels of inventories have also weighed on industrial production. Our survey of participants in China does indicate demand picked up after Chinese New Year, but not so much as to provide any upside surprises. Moreover, the Chinese market remains well supplied, with stocks continuing to edge up, although the SRB purchases should ease stock building on exchanges in the next few weeks. Capacity is now being curtailed in China in response to low SHFE prices - CRU has determined this will be to the tune of 1 mtpy – but despite this, production will grow by 9% in 2013 as a new smelting capacity in Xinjiang is brought on-stream in H2 2013.

Sheet and Plate declined 0.6% with Foil declining by 4.6%. Forgings and Impacts were down 2.4% and Drawing Stock, Bare Wire and Rod & Bar increased 4.8%. New can stock (class) scrap receipts declined 11.1% year over year