Prices of Aluminium Varieties Remained Firm amid Power Rationing and Fundamentals

SHANGHAI, Oct 13 (SMM) - The coup d'etat in Guinea in early September, a country with abundant bauxite resources, triggered market concerns about tighter supply of raw materials. Domestic power supply tightens due to the dual control of energy consumption and the sharp rise of coal prices, coupled with the power rationing policies. The most-active SHFE aluminium contract hit a record high of 24,000 yuan/mt. The funds left the market and downstream producers were subject to the power rationing policies in late September. The consumption was muted and SHFE aluminium contracts corrected. The most-traded SHFE aluminium contracts closed at 22,405 yuan/mt as of September 30, up 10.54% MoM. 

At the same time, the Fed continued to implement its liquidity easing policy in September, and the coup d'etat took place in Guinea and China, the world's largest producer and consumer of aluminium, have experienced production cuts and shutdowns, which together pushed LME aluminium to increase. At the Chicago Harbor Aluminum Summit in mid-September, industry insiders also agreed that the tight global supply of aluminium would be difficult to ease in the short term, stimulating market sentiment. LME aluminium once hit $3,000/mt, a new high since 2008. But the consumption has been hindered by the power rationing and rising costs since late September. Most aluminium processing enterprises cut their output. The overseas market fluctuated.  LME aluminium contracts averaged $2,851 yuan/mt as of September 30, up 10.06% MoM.