Chinese Aluminium billet market saw muted transactions and even negative conversion margins

SHANGHAI, Jul 4 (SMM) –SMM A00 aluminium prices rose from 18,470 yuan/mt last Monday to 18,540 yuan/mt on Friday, but the weekly average price lost 304 yuan/mt to 18,526 yuan/mt. Lower aluminium prices and slack downstream demand weighed down aluminium billet conversions margins.

South China: although fewer cargo arrivals drove billet stocks to drop, poor downstream demand forced billet suppliers to cut offers. Market confidence collapsed.

East China: Transactions were thin. Downstream enterprises bargained down billet purchase prices.

Nanchang: Transactions were scarce and negative conversion margins were heard.

Forecast: Entering July, aluminium price may go down, which could consequently support aluminium billet conversion margins. However, given that supply is surpassing demand, conversion margins will decline. Downstream firms are now entering an off-peak season and overall market sentiment is softening, which will affect upstream factories and may induce a certain output reduction in July. Aluminium billet stockpiles are under pressure, leading to predictions that conversion margins will continue to decrease this week.

Aluminium billet conversion margins by region (yuan/mt)