Bulls Watch Out: Aluminum Stocks in China Exceed 1.5 Million Tonnes, SMM Warns

Published: Aug 25, 2017 18:21

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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.

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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China aluminum stocks aluminum prices

Data Source Statement: Except for publicly available information, all other data are processed by SMM based on publicly available information, market communication, and relying on SMM's internal database model. They are for reference only and do not constitute decision-making recommendations.

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