SHANGHAI, Aug. 25 (SMM) – Aluminum stocks in China’s seven major markets have added another 57,000 tonnes week-on-week to 1.53 million tonnes this week, SMM data showed.
Oversupply Persists in East China Aluminum Market, SMM Reports
Consumption falls faster than supply, leading to the big growth, SMM explained.
In the face of off-season and high aluminum prices, downstream producers choose to buy as needed or work through stocks on hand. Some processors have halted production as a result of environmental policy, further hurting aluminum demand. Aluminum processors cut exports after the SHFE/LME aluminum price ratio rose.
Soaring Aluminum Prices Force Some Processors to Suspend Production, SMM Survey
Aluminum stocks should rise at a slower pace or even begin to fall with arrival of high-demand season in September. However, whether aluminum market will enter significant de-stocking will depend on both supply and consumption, SMM noted.
Supply side reform and environmental crackdowns also affect downstream sectors, which will hurt aluminum consumption.
To sum up, growing stocks and weak consumption will put pressure on market prices, SMM warns.
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