SHANGHAI, Apr 24 (SMM) - The recovery of Chinese economy is in stark contrast to stubbornly high inflation in the US. Downstream purchases may weaken after aluminium prices have climbed above 19,000 yuan/mt, thus the destocking of aluminium ingots is likely to slow down. However, aluminium prices could find support if smelters in Yunnan be subject to renewed power rationing in the future. The most-traded SHFE aluminium contract and LME aluminium are likely to move between 18,500-19,500 yuan/mt and $2,320-2,500/mt respectively this week.
In terms of fundamentals, aluminium smelters in Guizhou and Sichuan increased their production slightly, while those in other regions basically maintained stable operations. Yunnan is still in the dry season, and local smelters fear that they might be subject to additional output cuts in May. In addition, Qinghai province released a plan for peak electricity consumption in summer, which involves power rationing in aluminium industry, triggering supply concerns. Downstream operating rates were stable as a whole last week. The overall demand slowed down further, and orders in some sectors, such as alloy and extrusion, declined. Aluminium ingot social inventory fell more than 60,000 mt last week, mainly contributed by Wuxi and south China.
