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03 JULY 2018 AL CIRCLE

Commission of new aluminium capacity in China to slow down on lower aluminium prices

EDITED BY : DEBANJALI SENGUPTA 2MINS READ

As per the data by Shanghai Metals Market, total costs for primary aluminium plunged to 3.6 per cent in June, compared to the month ago. Until the end of June, total costs for primary aluminium stood at RMB 13942 per tonne, with the average price hovered at RMB 14221 per tonne throughout the month.

Both term and spot prices of primary aluminium lowered in June. Alumina costs and pre-baked anode costs for primary aluminium declined 8.1 per cent and 3.2 per cent respectively, compared to the previous month. Alumina price averaged at RMB 5505 per tonne.

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In the background of pre-baked anode price fall in June, Weiqiao Group lowered its purchasing prices for pre-baked anode by RMB 100 per tonne, marking a decline for seven months in a row, SMM learned. Oversupply in the market was also a reason for Weiqiao Group to lower the purchasing prices for pre-baked anode.

The month July also began with a fall in pre-baked anode average spot price in China, as it dipped from RMB 3235 per tonne, as of July 2, to RMB 3135 per tonne on July 3, 2018. The average price is expected to rally between RMB 3035 per tonne and RMB 3235 per tonne.

If these price drops continue this month then the commissioning of China’s new aluminium capacity in the second half of the year would likely to fall short of what was planned before, Shanghai Metals Market believed.

A total of 1.29 million tonnes of new aluminium capacity was commissioned in the first six months of this year, while another 2.36 million tonnes of aluminium capacity is planned to be commissioned in the next six months, SMM research showed. But we may see the commission of only 1.5 to 2 million tonnes of capacity in the second half of the year. Incessant aluminium price fall, high electricity costs, and unwillingness of aluminium producers to commission new capacities, as a result, could be the two key reasons for the slow commissioning of new aluminium capacity.

Moreover, the new regulation of China government to build captive power plants at aluminium smelters tends to slow down the process of capacity expansion.


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EDITED BY : DEBANJALI SENGUPTA 2MINS READ

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