SMM & Horizon Summit: Inventory to keep aluminium prices firm in long term

SHANGHAI, Jun 14 (SMM) – Aluminium prices are likely to moderate in the short term as demand weakens in a slack season but slower-than-expected growth in supply and shrinking inventories sustain an optimistic outlook on prices in the long run, said Wang Rui, senior aluminium analyst at SMM. 

At the Nonferrous & Ferrous Metals Summit jointly held by SMM and Chinese financial research firm Horizon Insights in Shanghai on Friday June 14, Wang expected China's aluminium stocks to ease to 700,000-800,000 mt by the end of 2019, against a backdrop of supply-side reform.

He also highlighted that the costs and balance of alumina will remain the focus of the market this year. The June-August period is likely to see a deficit of alumina by 430,000 mt in China, he estimated. 

Some 4.4 million mt of recovered or new capacity of alumina will come online in 2019, but commissioning will be slow. 

Qixing refinery under Shandong Luyu Bochuang has resumed 500,000 mt of capacity, and Jingxi Tiangui in Guangxi is expected to postpone the production of 800,000 mt of capacity till the third quarter, he said. State Power Investment’s new capacity of 1 million mt in Jinyuan plant will commission this month and generate output steadily in August. 

An open import arbitrage window is likely to trigger an influx of seaborne alumina into the Chinese markets, the analyst expected. An additional 180,000 mt of alumina imports is expected in July-August, following imports of 56,800 mt and exports of 18,800 mt in April.