[Al] Discussion on Inventory Changes and China’s Aluminum Market

SHANGHAI, June 24 (CBI China) -- Market players showed a lower aluminum price forecast in early this year due to severe overcapacity of aluminum in China. However, two surges for aluminum price in April and May were out of market expectations, generating discussions on domestic aluminum market conditions. CBI will make a brief analysis of domestic inventory changes.

    The chart shows the weekly changes in domestic inventories in spot market from January last year to June this year, and the three highest levels in this chart occurred in Chinese New Year and National Day holiday. The inventory experienced no significant continuous increases, but showed marked increases compared to weekly changes in LME inventories.

    As 590kt reserves conducted by State Reserve Bureau (SRB) are flat at total net imports of aluminum in 1H, so apart from these two reasons, the limited increases in China’s inventories indicate more production cuts at domestic aluminum producers at the end of last year, the marked effect from SRB aluminum reserve program in early this year, as well as the recovery of China’s aluminum consumption in 1H. Hence, CBI believes domestic aluminum markets were in balance during 1H 2009.

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