SHFE Aluminium to Remain Pressured by Poor Fundamentals after Refreshing a New Low in Four and a Half Months

SHANGHAI, May 9 (SMM) - After falling below the 20,000 yuan/mt mark in last Friday’s night trading session, SHFE aluminium dropped again today, hitting a new low in four and a half months at 19,575 yuan/mt.

According to data released by the General Administration of Customs today, the export volume of unwrought aluminium and aluminium semis in April reached 596,700 mt, an increase of 36.5% year-on-year, and the cumulative export volume from January to April reached 2.23 million mt, an increase of 29.2% year-on-year.
The aluminium ingot social inventories across China’s eight major markets totalled 1.03 million mt as of May 9, down 3,000 mt from a week ago and 72,000 mt lower than a year ago.

SMM data showed that China’s aluminium output stood at 3.3 million mt in April, up 1.47% YoY, and the average daily output was 109,900 mt, up 3,000 mt MoM and 1,600 mt YoY. Output totalled 12.76 million mt from January to April, a decrease of 1.13% YoY.

As of early May, operating aluminium capacity in China totalled 40.48 million mt, and the average operating rate of aluminium smelters was 91.6%.

The Fed's interest rate hike, weaker-than-expected US economic data, as well as reports of balance sheet scaling back by the US Fed and economic sanctions triggered market concerns about economic recession, weighing on LME base metals. The pandemic situation in China is still severe. Fast aluminium supply growth and inhibited consumption under the impact of the pandemic will continue to pressure short-term SHFE aluminium prices.