SMM anticipates secondary aluminium prices in China to remain sluggish ahead

According to Shanghai Metals Market, the secondary aluminium prices are likely to witness a downside trend ahead in China as demand will expectedly weaken. With less than two months to go before the implementation of tougher vehicle emission standards, the auto market will be on its toe to clear inventories of modals under old emission standards, rather than indulging in stocking secondary aluminium.

The secondary aluminium market has already taken a hit from sluggish auto sales. Data from the China Association of Automobile Manufacturers (CAAM) established that auto sales in China during January-April declined 12.1 per cent year on year.

Meanwhile, costs of secondary aluminium hold firm backed on steady aluminium prices due to robust consumption of primary aluminium and higher alumina prices. This in turn, is keeping aluminium scrap prices from declining.

The new vehicle emission standards will go into effect in July 2019 in certain areas like Beijing, Shenzhen, and Shanghai. By July 2020, the Chinese government will require all light vehicles to adhere to tougher emission standards as part of efforts to combat pollution.