Mixed trading in China's aluminium spot market after VAT cut

SHANGHAI, May 2 (SMM) – China’s aluminium spot market saw mixed trading on Wednesday May 2, after the value-added tax (VAT) cut took effect on May 1, with weak trades in east China but relatively active trades in the south, SMM learned.

The SHFE aluminium 1805 contract came off from a high of 14,415 yuan/mt in the morning.

For cargoes with May invoices, transactions in Shanghai were mostly heard at 14,300-14,320 yuan/mt with discounts of 30-20 yuan/mt against the 1805 contract.

Transactions in Wuxi and Hangzhou were mostly heard at 14,300-14,320 yuan/mt and 14,330-14,350 yuan/mt, respectively. Despite the lower VAT, sellers were keen to offer high with stable shipments. Traders remained cautious about purchases on worries of wider discounts, while downstream consumers purchased on demand. 

In the Guangdong market, cargoes with May invoices mostly traded at 14,330-14,350 yuan/mt with Guangdong-Shanghai price spreads of 30 yuan/mt.

Guangdong saw relatively brisk trading. Buyers made purchases for stockpiling after the Labour Day holiday while sellers offered high even as prices of futures fell. Processing fees for aluminium rods stood above 600 yuan/mt, unchanged from pre-holiday levels.

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