Modest Post-Holiday Recovery in Demand and Expectations of Lower Costs Weighed on Aluminium Prices

The most active SHFE aluminium contract prices surged initially and then dropped between January 11 and February 10, with the most active contract dipping to a low of 18,195 yuan/mt and surging to a maximum of 19,500 yuan/mt during this period. As of February 10, the most active SHFE aluminium contract closed at 18,630 yuan/mt, up 420 yuan/mt or 2.31%. LME copper prices also rose during the same period, moving between $2,450-2,700/mt. As of 15:00 CST February 10, LME copper price finished at $2,479.5/mt, a decline of of 0.37%.

In early January, the traditional off-season combined with the continuous inventory growth lowered the aluminium price to as low as 17,600 yuan/mt. However, the loosened pandemic prevention and control policy in China bolstered market optimism over strong demand. And the aluminium price thus rebounded and the most active SHFE aluminium contract soared to a high of 19,500 yuan/mt ahead of CNY holidays. In the first week after CNY holidays, aluminium prices were supported thanks to market optimism over downstream demand recovery and market speculations over power rationing in Yunnan, despite significant inventory growth. The average aluminium price stood at around1 9,000 yuan/mt. The price of coal fell as Australian coal arrived in China for the first time in more than two years. The cost of aluminium has declined. Refined aluminium inventory has accumulated nearly 1.2 million mt and remained on the rise. Therefore, SHFE aluminium prices plummeted to 18,600 yuan/mt, closing at 18,610 yuan/mt.