Chinese Oversupply Still Haunts Aluminum

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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.

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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.

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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.

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