Chinese aluminium prices likely to be firm in the long run while stocks to ease by 2019; analyst says

Senior aluminium analyst at SMM, Wang Rui, said that aluminium prices in the short term are likely to moderate on weaker demands in a slack season but slower-than-expected in supply and shrinking inventories sustain on optimistic outlook on prices in the long run.

At the Nonferrous and Ferrous Metals Summit jointly held by SMM and Chinese financial research firm Horizon Insights in Shanghai on Friday, June 14, Wang Rui expected China’s aluminium stocks to ease to 700,000 to 800,000 tonnes by the end of 2019. He also shared that the costs and balance of alumina will remain the point of focus in the market in 2019. However, the June-August period is likely to see a deficit of alumina by 430,000 tonnes in China, he estimated.

Some new alumina capacity of around 4.4 million tonnes is likely to come online in 2019, but commissioning is expected to be slow.

Qixing refinery under Shandong Luyu Bochuang has resumed 500,000 tonnes of capacity, but Jingxi Tiangui in Guangxi is expected to postpone the production of 800,000 tonnes till the third quarter, said Mr. Rui.

He also said State Power Investment’s new capacity of 1 million tonnes in Jinyuan plant will start this month and generate output from August.

The analyst expects than an open import arbitrage window is likely to trigger an influx of seaborne alumina into the Chinese markets. An additional 180,000 tonnes of alumina imports are expected in July-August, following imports of 56,800 tonnes and exports of 18,800 tonnes in April.