China aluminum prices up on improved demand

As of May 24, China’s national price of 99.7% primary aluminum ingot under Mysteel’s assessment had climbed to Yuan 20,604/tonne ($3,097/t) including 13% VAT, up by Yuan 190/t or 0.9% on week.

Also on Tuesday, the most-traded aluminum contract on the Shanghai Futures Exchange (SHFE) for July delivery closed the daytime trading session at Yuan 20,465/t, up Yuan 50/t from the settlement price on May 17, Mysteel Global noted.

“There is a strong market expectation that the citywide lockdown in East China’s Shanghai will gradually ease in the near term, with the resumption of industrial activities being the top priority. And this may prompt local aluminum demand to recover markedly,” a Shanghai-based analyst remarked. “Such expectations, together with the improved macro-economic environment, are lifting the market sentiment,” he added.

Last week also saw trading in the spot market improve, with some aluminum processors and fabricators making procurement to meet their near-term production needs. And traders also actively sold stocks at hand amid the climbing prices, Mysteel observed.

Besides, improved demand led stocks of primary aluminum at SHFE-licensed warehouses and in 16 Chinese cities under Mysteel’s tracking to drop further, down by 40,000 tonnes or 3.9% on week to 980,000 tonnes as of May 23 – a low since mid-February.

Regarding aluminum supply, Chinese smelters had kept their production largely stable, with some producers continuing to ramp up operations, due to sufficient power supply and relatively healthy profit margins they were earning.

According to Mysteel’s latest data, aluminum production among 89 Chinese smelters nationwide under Mysteel’s tracking increased another 700 tonnes on week to around 790,300 tonnes over May 12-18.