China aluminium inventory at 10-year high; A00 ingot prices up in tandem with LME

SHFE aluminium is following the movement of its western counterpart and growing despite the growing inventories in China. According to SMM statistics,  offsetting all the efforts of winter capacity cut, China’s social inventory of refined aluminium including SHFE warrants surged to near-10-year high at 1.76 million tonnes on Thursday December 28. This was up 22,000 million tonnes from a week ago.  

However, primary ingot prices are trending high despite higher invenotory. Today’s increase in A00 ingot price in the major Chinese markets can be seen in the following table:

Average A00 ingot price stands at RMB 14,700 per tonne today and expected to move within a range of RMB 14,680-14,720 today.  Spot discount is set to widen further to RMB 400-360/t. Aluminium ingot price in the South China market is trending the highest at RMB 14,880/t.

We discussed yesterday, how the smelters used the capacity swap quotas during winter capacity closure drive and the total capacity remained almost same. Details of the current aluminium stock in the major markets are as follows:

Alumina prices are showing some restraint after falling continuously through December. Today’s average spot alumina price remains unchanged at RMB 2855/t. Chalco and imported alumina prices also remain unchanged.

Higher primary aluminium prices have also lifted aluminium alloy price across all markets. Average prices of Aluminum Alloys (ADC12) have increased to RMB 16,150 per tonne today. Aluminum Alloy (A356) and Aluminum Alloy (A380) prices have increased to RMB 15,400 and RMB 16,900 per tonne respectively.