Traders flood China aluminium market on rising prices, downstream producers at loss

<p>According to an SMM report, traders in both East and South China markets actively sourced metals yesterday due to the rally in SHFE aluminium prices for two consecutive days. The price rise has fuelled their optimism which is expected to continue in the near term.&nbsp;</p> <p>A00 ingot prices in Guangdong traded within a range of RMB 16,280-16,300/tonne, versus RMB16, 200-16,240 /tonne in Shanghai. According to SMM statistics, average prices for A00 aluminium ingot in China stood at RMB 15,809/t in the week ending Aug 18 registering a growth of 2.25% fromlast week&rsquo;s average.</p> <p>The movements in benchmark aluminium price at Shanghai Metal Exchange (SME) in August are shown in the graph below (Unit: US$/t):</p> <p style="text-align: center;"><img style="vertical-align: middle;" src="http://www.alcircle.com/uploads/images/sme%20price.png" alt="News" width="517" height="226" /></p> <p>Downstream producers, by contrast, were reluctant to buy at current high prices as production gets unprofitable for them. &nbsp;SMM also reports that some small secondary aluminium alloy producers in Henan have rejected new orders and suspended production as they are facing losses due to surging aluminium prices and aluminium scrap prices.</p> <p style="text-align: center;"><a title="potline report" href="http://www.alcircle.com/primary_aluminium/newscircle/general/detail/28445/the-wait-is-over-alcircle-exclusive-report-on-potline-failure-now-available-for-purchase" target="_blank"><img style="vertical-align: middle;" src="http://www.alcircle.com/uploads/images/buynow.gif" alt="News" width="480" height="84" /></a></p> <p>Though the bigger-than-expected rise in aluminium prices has created positive market sentiment in the global market, it has incurred losses on almost all downstream processors. &nbsp;</p>