Do Aluminum Prices Need Help from Commercial Stockpiling in H2 2016? SMM Reports

SHANGHAI, Aug. 8 (SMM) – The JV co-invested by China’s six aluminum giants, which is responsible for stockpiling aluminum from the market, obtained business on August 2, marking its official establishment.

Aluminum prices need no saving from commercial stockpiling for now since quite low stocks have helped driven aluminum prices up from record low of 9,600 yuan/tonne seen late last year to current 12,000 yuan per tonne, SMM pointed out.

However, aluminum prices will face downward pressure from growing supply in the second half the year, SMM warned. 

Smelters, lured by lucrative profit from current prices, are passionate about restarting idled capacity and putting online new capacity. SMM estimates that 1.5-2 million-tpy new aluminum capacity will be added in H2 and another 700,000-tpy capacity will come back online. 

Chalco Hikes Aluminum Prices in Major Markets further on August 8

Despite downward pressure, aluminum prices are unlikely to fall to levels that need support from commercial stockpiling, SMM noted. SMM sees SHFE aluminum moving between 11,500-12,500 yuan per tonne in H2 2016.

The JV, named as Zhongheng Xieli Investment Co. is co-founded by Chalco, China Power Investment Corporation, Shandong Weiqiao Aluminum & Electricity, Yunnan Aluminum, Jiuquan Iron & Steel Group, Jinjiang Group.  

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