Chinese Aluminum Glut Coming

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Oversupply in China’s aluminum market is expected to escalate in Q1 2015 on massive new capacities and falling demand, according to Shanghai Metals Market.

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Most new capacities came on stream in H2 2014. Nearly 3 million total-per-year aluminum capacity factorites in Xinjiang and at Shandong Weiqiao Group began to enter operations in September 2014, which will gradually reach full capacity in Q1 2015.

On the demand side, many aluminum processors will not return to production immediately after the Chinese New Year holiday – February 19 this year – due to cash crunch and poor orders.

On Friday, January 2, the day’s biggest mover was the 3-month price of aluminum, which saw a 0.3% increase on the LME to $1,858 per metric ton. The Indian aluminum cash price weakened by 0.2%, settling at INR 118.10 ($1.87) per kilogram. On the LME, the primary aluminum cash price fell 0.1% to $1,831 per metric ton.

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Chinese aluminum prices closed flat for the day. The price of Chinese aluminum scrap saw essentially no change for the fifth day in a row, remaining around CNY 12,600 ($2,028) per metric ton. The price of Chinese aluminum billet remained steady at CNY 13,200 ($2,125) per metric ton. Chinese aluminum bar held its value last Friday at CNY 13,000 ($2,092) per metric ton. The Chinese aluminum cash price saw little price change last Friday at CNY 12,990 ($2,091) per metric ton.

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