Aluminum Prices Climbing As Optimism Continues

The SMM China Aluminum Ingot Trade Index during July 18th to July 22nd slightly rose to 51.4%, up by 6.3% from previous week, and broke through the balance line of 50%. As domestic spot aluminum inventories continuously fell and will keep falling in the short term, goods holders were holding goods to build up inventories, which led to continuously climbing aluminum prices. Though downstream processors still purchased on an as-needed basis, inquiries from purchasers increased due to limited spot aluminum supply. As a result, market sentiment grew during this survey period and an optimistic trend was shown.

In order to objectively and accurately show China’s spot aluminum ingot trading market, SMM has surveyed spot aluminum ingot traders from different regions, of different types and scales, based on their total traded volumes, downstream purchase volumes, traders inventories, cash flows and employee numbers etc.

This survey has covered 40 aluminum traders with a total monthly traded volume of over 313 kt. These traders are located in Shanghai, Wuxi, Hangzhou, Nanhai, Tianjin and Shenyang.

The SMM China Aluminum Ingot Trade Index – Transaction Index had seen a quicker rebounding to 55% above the balance line of 50%, up by 11.8% from previous week. With climbing aluminum prices and tight spot aluminum supply, middlemen purchased actively. Meanwhile, as downstream processors still purchased on an as-needed basis which provided a stable consumption, both suppliers and buyers were active in the market due to bullish market sentiment. As a result, spot aluminum transactions increased from previous week and showed an improving trend.

The SMM China Aluminum Ingot Trade Index – Aluminum Price Expectation Index continuously rose to 78.8%, up by 4.5% from previous week. As domestic spot aluminum inventories kept falling, unwillingness to sell among goods holders surged, which pushed aluminum prices to continuously rise with SMM aluminum prices hitting RMB 17,900/mt on July 25th. As bullish sentiment remains strong, aluminum prices will continuously hit new highs.

The SMM China Aluminum Ingot Trade Index – Downstream Order Expectation Index fell for 3 successive weeks to 41.3%, down by 6% from previous week. Due to stronger month-end capital pressure and seasonal low-demand, production orders in the aluminum ingot processing industry fell, which in turn weakened demand for spot aluminum.