Spot aluminium discounts to expand end-Dec

SHANGHAI, Dec 13 (SMM) – Spot aluminium discounts across Chinese markets are expected to widen at the end of December as new capacity, cargoes and stockpiles across producers grow supplies across the markets.

SMM assessments showed that A00 aluminium prices remained flat from the SHFE December contract for four consecutive trading days as of Wednesday December 12. Limited supplies across markets accounted for the recent strength in spot prices.

Recent large purchases made by several big traders at high prices depleted supplies and pushed up prices.

Social warehouses saw fewer arrivals. SMM data showed that primary aluminium inventories across major consumption areas in China decreased by some 150,000 mt between November 12 and December 10. Newly capacity is expected to grow shipments to social warehouses.

As the year draws to a close, tight cash flows drove some traders to pledge their inventories of primary aluminium for a loan. This tightened supplies available in the market. These resources are expected to return to the market when cash issues ease in the new year.

Cash flow issues might prompt aluminium producers to pour their stockpiles into the market. After aluminium prices fell below 14,000 yuan/mt in March, some producers stockpiled cargoes in anticipation of gains in prices. However, continued weakness in prices kept those materials from entering the spot markets.