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China Aluminium Processing Summit 2020: High domestic demand to sustain till mid-June
Jun 11, 2020 17:02CST
Source:SMM
Strong domestic demand for aluminium will likely sustain till mid-June in China, before the arrival of a traditional slack season weighs on overall downstream consumption, according to SMM chief aluminium analyst Frank Liu. 

SHANGHAI, Jun 11 (SMM) – Strong domestic demand for aluminium will likely sustain till mid-June in China, before the arrival of a traditional slack season weighs on overall downstream consumption, according to SMM chief aluminium analyst Frank Liu. 


Speaking at the 15th China International Aluminium Processing Industry Summit in Yantai, Shandong province on June 11, Liu said overseas demand weakened as expected amid the coronavirus crisis, but this has not caused a significant impact on the robust domestic consumption. 


In the Chinese market, a rise in demand from construction since mid-March and from the pharmaceutical sector after the Chinese New Year holiday bolstered consumption of aluminium. Demand from the home appliances sector surged after the Labour Day holiday, and this became a key driving force for the aluminium market, according to Liu. 


Stepped-up exports of Chinese aluminium products in March and early-April kept the export reading from falling markedly from a year ago. But Liu expected China’s aluminium products exports to decline on a monthly and yearly basis during the May-June period, citing weakness in new export orders since April. 


According to SMM data, social inventories of primary aluminium in China slipped from the highest level this year at 1.65 million mt on April 2, falling to 924,000 mt as of end-May. 


The latest SMM data showed that social inventories of primary aluminium ingots across eight consumption areas in China, including SHFE warrants, decreased 60,000 mt in the week ended June 11 to 787,000 mt, after a decline of 46,000 mt in the previous week.


The weekly shipments of aluminium ingots from warehouses posted record high levels in late-March, on the back of significant pickup in end-users demand and market stockpiling. Liu also believed that surged prices of aluminium billet at that time also drove downstream consumers to turn to spot aluminium ingots. 


Domestic supply of primary aluminium recovered in May as smelters reopened with the coronavirus pandemic effectively contained in China, but the rise in supply was at a slow pace, said the analysts. 


SMM data suggested that China’s primary aluminium output rose nearly 1% year on year to 3.07 million mt in May. As of the end of May, there was 36.58 million mt among 41.23 million mt per year of existing primary aluminium capacity in operation, up 700,000 mt from a month ago.


Liu expected near-term prices of alumina to continue to move sideways in a narrow range amid a tight balance of demand and supply that has lasted for several months. 

 

 

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