Chinese A00 aluminium ingot price declines on increased inventory and extended price drop of alumina

According to Shanghai Metals Market, social inventories of primary aluminium across eight major consumption areas in China, including SHFE warrants, increased 6000 tonnes over the week ended on December 27, to come in at 1.29 million tonnes.

More arrivals from smelters and smaller purchases from downstream buyers grew stocks on the week, following a week-on-week drop of 15,000 tonnes last Thursday.

On last Thursday, December 27, the primary aluminium inventory in Shanghai was at 318,000 tonnes that increased 3000 tonnes over the week today to clock at 321,000 tonnes. The inventories in Gongyi and Henan, and Hangzhou and Zhejiang also increased from 73,000 tonnes to 81,000 tonnes and from 103,000 tonnes to 111,000 tonnes, respectively. Many other markets, on the other hand, saw plunges as well.

The below graph shows the present status of Chinese primary aluminium inventories in more details:

In this background, the A00 aluminium ingot price recorded a significant drop today by RMB 170 per tonne, after rising four days in a row. The price came in at RMB 13,540 per tonne from RMB 13,710 per tonne on December 26. The average prices are expected to range between RMB 13,520 per tonne and RMB 13,560 per tonne, with spot discounts to settle at RMB 130 per tonne to RMB 90 per tonne.

In the east, Wuxi and Hangzhou, the ingot prices plunged RMB 145 per tonne to stand at RMB 13,540 per tonne and RMB 13,545 per tonne, while that in the south and north dropped RMB 160 per tonne and RMB 90 per tonne to clock at RMB 13,710 per tonne and RMB 13,550 per tonne, respectively.

The drop in ingot prices is also buoyed by the extended price drop of alumina as well. Today, on December 27, the alumina price in the Chinese spot market dropped further to RMB 2,934 per tonne from RMB 2,950 as of December 26.

The Australian alumina FOB price also dropped today to US$ 405 per tonne after hovering at US$ 415 per tonne from December 21 to December 26, 2018.