Overcapacity in China’s beleaguered aluminum market will persist in the coming months, weighing on local prices and boosting the appeal of shipping aluminum products overseas, traders and analysts said.
Increased product exports will help plug a supply deficit in the West, but will also fuel competition with Western producers. Exports from the world’s No.1 aluminum miner are already dragging on premiums – the cost of obtaining physical metal – in Asia.
“We certainly expect low (Chinese) prices to continue,” Paul Adkins, managing director of Beijing-based consultancy AZ-China, told Reuters.
On Monday, January 19, the day’s biggest mover was the Indian aluminum cash price, which saw a 1.2% increase to INR 113.45 ($1.83) per kilogram. At $1,798, the cash price of primary aluminum finished the market day on the LME up 0.9% per metric ton. After a 0.9% increase, the aluminum 3-month price finished the day on the LME at $1,808 per metric ton.
Chinese aluminum closed mixed last Friday. Chinese aluminum scrap prices inched up 0.8% to CNY 12,200 ($1,965) per metric ton. The cash price of Chinese aluminum inched up 0.6% to CNY 12,850 ($2,070) per metric ton. At CNY 12,860 ($2,072), the price of Chinese aluminum bar finished the market day up 0.6% per metric ton. The price of Chinese aluminum billet was unchanged at CNY 13,200 ($2,126) per metric ton.