Aluminium production cut in Yunnan begins sending domestic metal prices range-bound: SMM

As expected earlier, aluminium production cut in Yunnan province and weaker-than-expected demand recovery would make the metal prices range-bound; both primary aluminium ingot price and aluminium alloys prices have remained muted as of Wednesday, February 22. According to the Shanghai Metals Market, China’s domestic A00 aluminium ingot price has recorded no change from RMB 18,620 per tonne, with average prices continuing to range between RMB 18,600 per tonne and RMB 18,640 per tonne.

However, in some Chinese provinces, the ingot price has moved up and down. For instance, in Gongyi and Foshan, the price has grown by RMB 10 per tonne to stand at RMB 18,490 per tonne and RMB 18,630 per tonne, respectively. In contrast, the price in Linyi, Tianjin, and Hangzhou has dropped by RMB 30 per tonne, RMB 20 per tonne, and RMB 5 per tonne to come in at RMB 18,620 per tonne, RMB 18,600 per tonne, and RMB 18,615 per tonne as of February 22.

The domestic price of low-carbon aluminium has recorded an increase of RMB 19 per tonne to peg at RMB 19,223 per tonne on February 22, learned SMM.

Aluminium alloys prices have shown no change as well. While aluminium alloys (ADC12) price has remained restrained at RMB 19,900 per tonne, aluminium alloy (A356) price and aluminium alloy (A380) price have continued to stand at RMB 19,700 per tonne and RMB 20,900 per tonne, according to SMM.

No raw materials prices have shown change either. The average alumina spot price continues at RMB 2,947 per tonne, following a slight rise of RMB 1 per tonne the previous day.

Aluminium powder price dipped on February 21 by RMB 0.10 per kg, following which remained restrained on Wednesday, February 22. 

However, the CITIC Securities Research Report suggests the tight supply of aluminium on production cut in Yunnan will lead to a price hike ahead. The scale of reduction in aluminium production in Yunnan Province is likely to reduce Chinese aluminium capacity by 700,000-800,000 tonnes.