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14 SEPTEMBER 2018 AL CIRCLE

Primary aluminium production cost in China may rise in Q4 2018: SMM apprehends

EDITED BY : DEBANJALI SENGUPTA 2MINS READ

Shanghai Metals Market senior analyst Liu Xiaolei believes that the production cost of primary aluminium may surge backed on settling down of charges over captive power plants in the Shandong province earlier this week. This whole phenomenon may bolster the domestic prices of primary aluminium as well, apprehends Liu further.

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Price Bureau of the province set the charges at RMB 0.1016 kWh and gives a winding down period from July 1, 2018, to December 31, 2019. The charges stand at RMB 0.05 kWh during that period.

This is likely to drive the cost up to RMB 680 with the charges at RMB 0.05 kWh, given the costs RMB 13,600 kWh to produce one tonne of primary aluminium. Liu expects prices of primary aluminium to trade at RMB 14500 per tonne to RMB 15500 per tonne in the fourth quarter of the year.

As of today, September 14, the A00 aluminium ingot price is standing at RMB 14510 per tonne, after registering a rise by RMB 30 per tonne from yesterday. The average prices are expected to range between RMB 14490 per tonne and RMB 14530 per tonne, with spot discounts still remaining at RMB 20 per tonne.

In the east, the ingot price today is hovering at RMB 14510 per tonne, up RMB 35 per tonne from the previous day; in the south and north, the prices are at RMB 14560 per tonne and RMB 14530 per tonne, up RMB 30 per tonne and RMB 40 per tonne, respectively.

Liu expects that unlike aluminium prices, alumina costs will not grow sharply given the positive developments in Hydro’s alumina operations in Brazil.

Liu also sees the limited downward room in alumina prices as strikes at Alcoa’s alumina operations in Western Australia have scaled down the company’s output.


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EDITED BY : DEBANJALI SENGUPTA 2MINS READ

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