SHANGHAI, Aug. 16 (SMM) – Rampant speculations over supply side reform and production cut policy during winter heating season have sent aluminum prices to new highs.
However, market should not neglect poor market fundamentals, SMM warns.
Annualized aluminum capacity in operation in China totaled 36.74 million tonnes in July, up 5.22 million tonnes from a year ago. New and restarted capacity has come online on a large scale since 2016 along with recovering aluminum prices.
China’s monthly aluminum output rose sharply on a yearly basis this year. The country produced 21.42 million tonnes of aluminum during the first seven months of this year, up 20.9% year-on-year, SMM data showed. Output cuts are almost unlikely to reverse supply surplus this year.
Domestic aluminum stocks have been rising at a staggering pace since October 2016, due to big growth in production.
Spot discounts have been expanding over the past few months due to surging SHFE aluminum, reaching 180-220 yuan/tonne on Aug. 10.
Supply side reform did not reverse oversupply. Without support from market fundamentals, aluminum prices are at risks of falling back, SMM noted.
For news cooperation, please contact us by email: firstname.lastname@example.org or email@example.com.