China A00 Aluminium prices get quick boost on capacity cut rumours, raw material prices follow suit

As expected, the average prices of A00 Aluminium has registered a substantial gain across all major Chinese markets (North, South, North-East and South-West)  today based on the news in the market that China Hongqiao Group will shut down 2.6 million tonnes of aluminium capacity before October.  Market participants expect that more than 2 million tonnes capacity cut by the largest aluminium producer in the world would make a sizable difference in the aluminium inventory.

On August 3, among the domestic markets, the average price for A00 Aluminium Ingot for North China market has increased to RMB 14,440/t. In the South China market the price increased to RMB 14,520/t. The price gap between the two market increased toRMB 80/t.

The price in East China market (Zhejiang) jumped to RMB14,505/t and for Jiangsu province it increased to RMB14,475/t.

For the Southwest China market, the price increased to RMB 14,470/t and for Northeast China market it stood at RMB14,390/t.  South China market price remains the highest among the domestic market.

Keeping pace with the market prices, China Aluminum International Trading Co. (Chalco Trading) has raised aluminium prices it offered in major markets significantly today after yesterday’s rumour on China Hongqiao Group’s aluminium capacity cut.

Unit: RMB/t

The capacity cut news is causing ripple effects in all allied sectors. Alumina prices remain flat due to slow demand across China. However, a rise in the price of aluminium has lifted prices of Cryolite and pre-baked anode prices, two of the most essential materials in aluminium smelting.

Prebaked anode prices (TY-1) in East China market has increased to RMB 3,950/t and are expected to move within a range of RMB 3,820- RMB 4,080 per tonne.  Cryolite (CH-0&CH-1) prices have increased to RMB 5,900/t and are expected to move within a range of RMB 5,800- RMB 6,000 per tonne.  

The prices are expected to stay bullish on positive market sentiments caused by the news of capacity cuts by the aluminium heavyweights in China. SMM however, observes that the cuts will not exceed 2 million tonnes since China Hongqiao Group’s outdated aluminium capacity is not as high as 2.6 million tonnes.