Aluminium Ingot January Production Analysis & February Forecast

According to SMM's research findings, Yunnan Province is currently experiencing a dry season, with hydropower contribution remaining at a relatively low level. Enterprises have no immediate plans for production resumption and await clearer policy guidance from the power sector.

The implementation of Indonesia's ban on bauxite exports since June last year has led to bauxite surplus, brought challenges to consume domestically as the Indonesia's alumina plants have limited capacity. Ronald Sulistyanto, Chairman of the Indonesian Bauxite and Iron Ore Entrepreneurs Association (Asosiasi Pengusaha Bauksit dan Bijih Besi Indonesia - APB3I), highlighted the struggle to secure external investment for alumina plant projects, while some entrepreneurs are forced to cut costs or halt production. However, there is hope for relief through potential relaxation of the export ban policy. Efforts are underway to boost alumina production capacity, although challenges persist in addressing the surplus bauxite issue.

On Tuesday, LME aluminum is expected to lurch higher, with price between USD 2,160-2,185/mt.

SMM expects aluminum to hover at highs in the short term, and eyes should be on its support at the 5-day moving average.  

At current spot prices, the smelters generate strong cash flow.

LME aluminum will trade at USD 2,005-2,035/mt on Thursday, and SHFE 1710 aluminum will regain losses seen on Wednesday’s night trading, with price estimated at RMB 16,000-16,250/mt. 

LME aluminum will fall back to USD 1,930-1,950/mt today deu to strong resistance at above USD 1,950/mt.

On Thursday’s night trading, base metals were mixed, with nickel and tin outperforming, and prices are expected to keep diverging on Friday.

The US dollar index fell to its lowest since July at 93.349 following the US Fed’s decision not to hike rate.