China Aluminium Processing Summit 2020: Domestic aluminium demand to remain robust till mid-June

Shanghai Metals Market chief aluminium analyst Frank Liu estimates strong domestic demand for aluminium to likely sustain till mid-June in China.

Speaking at the China International Aluminium Processing Industry Summit in Yantai on June 11, Liu pointed out that although the global demand for aluminium has weakened as expected amid the Coronavirus crisis, there has been no significant impact on the domestic consumption.

In China, demand from the construction industry rose since mid-March and demand from the pharmaceutical sector increased after the Chinese New Year holiday, resulting in the ramp-up in aluminium consumption. Demand from the home appliance sector, on the other hand, surged after the Labour Day holiday, becoming a key driving force for the Chinese aluminium market, said Liu.

Liu also noted at the summit that increase in exports of Chinese aluminium products in March and early-April kept the export reading from falling markedly from a year ago. But he expects the exports to decline on a monthly and yearly basis during May-June, given the sluggish export orders since mid-April.

Shanghai Metals Market data showed social inventories of primary aluminium in China declined from the highest level this year at 1.65 million tonnes on April 2 to 924,000 tonnes as of May-end, largely because of limited supply but stable demand and consumption.

The weekly shipments of aluminium ingots from warehouses posted record high levels in late-March, backed on significant pickup in end-users demand and market stockpiling. Liu believed surge in aluminium billet prices at that time switched the demand from downstream metal to primary.

However, domestic supply of primary aluminium recovered in May, although at a slower pace, as smelters resumed production post lockdown, said the analyst.

According to SMM, China’s primary aluminium production in May came in at 3.07 million tonnes after rising by nearly 1 per cent year-on-year.