Aluminum Smelters in China squeeze supply on the news of SHFE’s gain on Friday

<p>Amidst uncertainties about aluminium capacity cut in China, The government has issued a suggestion that construction of new coal-fired captive power plants will be banned in cities like Beijing, Tianjin, Hebei, Yangtze River Delta and Pearl River Delta. The document also directed that coal-fired captive power plants must comply with national energy-saving and emission discharge standards.&nbsp;On this news, SHFE aluminium prices jumped to RMB 14,850/mt on Friday after opening at RMB 14,690/mt. SHFE 1710 aluminium plunged later, closing at RMB 14,765/mt.&nbsp;</p> <p style="text-align: center;"><img style="vertical-align: middle;" src="http://www.alcircle.com/uploads/images/aluminium.jpg" alt="News" width="517" height="226" /></p> <p>On this development, aluminium smelters in east China are holding back goods as recent gains in SHFE aluminium market have fuelled their optimism. Market supply was squeezed as a result, which forced downstream producers to accept higher prices for the metal.&nbsp;</p> <p>As of August 4, mainstream traded prices were 14,450-14,460 yuan/tonne in Shanghai, 14,450-14,460 yuan/tonne in Wuxi, and 14,480-14,500 yuan/tonne in Hangzhou. &nbsp;</p> <p>{googleAdsense}</p> <p>In another update from SMM, it is learned that aluminium billet stocks in Guangdong have been growing steadily due to off-season low order from the downstream producers. As of August 3, aluminium billet stocks in Guangdong stood at 98,400 tonnes, up 8,800 tonnes on a weekly basis.&nbsp;So, one capacity cut or supply tightness in one region is being compensated by growing stocks in another market keeping the market prices in check.</p> <p>&nbsp;</p>