China’s aluminum market saw demand from end-users strengthen further over the past week, with stocks held in warehouses also declining further, according to market sources on Thursday.
“The central government has rolled out stimulus policies to boost domestic economic growth, Shanghai also lifted the long, citywide lockdown from June 1, and local government authorities are unveiling scores of policies to revitalize regional economies,” a Shanghai-based analyst remarked.
“All of these will help to boost industrial activity, and over the past week we’ve already seen some aluminum processors and fabricators gradually lift their production and source slightly more feed materials,” he noted.
Consequently, trading in the spot market improved last week, with end-users seeking procurement to meet their near-term production needs. Moreover, on Wednesday when aluminum prices experienced a sharp correction, buying was even more active, Mysteel Global notes.
On June 1, the most-traded aluminum contract on the Shanghai Futures Exchange (SHFE) for July delivery closed the daytime trading session lower at Yuan 20,280/t ($3,033/t) dropping markedly by Yuan 495/t or 2.4% from the settlement price on May 31 as markets reacted to news of a loans scandal concerning ingot inventories in southern China, Mysteel Global noted.
In the spot market, the country’s national price of 99.7% primary aluminum ingot under Mysteel’s assessment also slumped by Yuan 551/tonne on day to reach Yuan 20,207/tonne including 13% VAT on Wednesday.
Regarding aluminum supply, Chinese smelters are keeping their production stable for the time being, with primary ingot output among the 89 Chinese smelters nationwide under Mysteel’s tracking increasing by another 2,600 tonnes on week to around 792,900 tonnes over May 19-25.
Nevertheless, the demand improvement has been generally more substantial, with the result that the stocks of primary aluminum at SHFE-licensed warehouses and in 16 Chinese cities under Mysteel’s tracking continued to shrink over the past week to 91,000 tonnes as of June 2 – down by another 58,000 tonnes or 6% on week to reach a new low since late-January.
Written by Victoria Zou, zyongjia@mysteel.com
This article has been published in accordance with an article exchange agreement between Mysteel Global and SteelMint.
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