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SMM Price Forecast Conference 2019: Aluminium supply to accelerate growth
Oct 19,2018 14:59CST
featuresmm insight
Consumption of primary aluminium is likely to slow from 5.3% in 2018 to 3% in 2019

SHANGHAI, Oct 19 (SMM) – China's primary aluminium supply is expected to grow at 4.1% in 2019, while consumption is likely to grow at a slower pace of 3%, said Liu Xiaolei, SMM senior analyst.

In 2018, primary aluminium capacity with higher costs ran in losses, driven by cash flow issues and falling aluminium prices. This prompted some smelters to suspend operation, to postpone the commissioning of new capacity or to commission less capacity, and supply shrank as a result. Output of primary aluminium in 2018 is estimated to grow 1.9% compared to 2017, Liu told the delegates in Shanghai on October 19 at an annual pricing conference organised by SMM.

Newly-commissioned capacity would amount to 3.3 million mt in 2018, some 1 million mt less than estimated at the beginning of the year, showed SMM data. Output grew at a rate of 3.9% in 2016 and of 14.2% in 2017, SMM data showed.

Liu said that consumption of primary aluminium across China is expected to grow at a rate of 5.3% in 2018 and at 3% in 2019. Actual growth in consumption came in at 7.9% in 2016 and 9.1% in 2017.

SMM expects the most liquid SHFE aluminium contract to trade at 13,500-15,000 yuan/mt in the second half of 2018. Its LME counterpart is likely to trade at $2,000-2,150/mt. Prices of futures are likely to face pressure in the first half of 2019, hovering at 13,500-14,500 yuan/mt, and are likely to rebound to 14,000-15,000 yuan/mt in the second half of the year.

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