Aluminium prices drop across China on rising aluminium stocks; no confirmation on capacity cuts

Discouraging all efforts towards capacity cut, aluminium stocks in China are continuously rising in July and August.  SMM statistics showed that aluminium stocks in five major markets, including SHFE aluminium stocks have touched fresh record highs recently.

As of August 3, stocks in Shanghai stands at 275,000 tonnes, Wuxi  at 566,000 tonnes, Gongyi at 95,000 tonnes, Hangzhou  at 88,000 tonnes and Nanhai  at 310,000 tonnes. All these five markets put together, the current aluminium stock stands at 1.33 million tonnes, up 51,000 tonnes from a week ago. 

SHFE Aluminium and A00 ingot prices soared in all markets after the much hyped higher-than-expected capacity cut rumours at China Hongqiao. Shandong Xinfa Group has also announed completion of shutdown of 426 electrolytic cells, with a capacity of 530,500 tonnes as of July 28.

But, with the fading away of such rumours, aluminium prices have dropped in just one day.

China Aluminum International Trading Co. (Chalco Trading) has cut aluminium prices it offered in major markets today after yesterday’s dramatic hike. SMM says that the sudden hike on August 4 was just a temporary outcome of the rumour that China Hongqiao Group will slash substantial aluminium capacity.  Today, aluminium prices are cut across-the-board as there is no solid ground beneath such curtailment news and the positive market sentiments are just temporary trends.

Unit: RMB/t

The Chinese market is expected to remain volatile till the time there is any confirmation on solid capacity cut and the inventories are within control.