WEEKLY: China’s aluminum stocks down on lower supply
Source: Mysteel
Oct 22, 2019 17:30
He noted that the smelters whose operations were hurt by weather events and incidents during the past two months had not resumed full production yet, citing Shandong Weiqiao Aluminum as an example. In mid-August, Super Typhoon Lekima brought severe rains and floods to Shandong province, causing equipment breakdowns at the 250,000 tonnes/year capacity smelter, as reported. When operations on the affected potlines might restart remains unclear, Mysteel Global notes.
Given the rather stable fundamentals, as of October 18 Mysteel’s national average price for 99.7% aluminum ingot had gained slightly on week, moving up by Yuan 21/tonne ($3/t) to Yuan 13,969/t including the 13% VAT.
Longer term however, market insiders are growing nervous about a possible blow-out in supply as domestic smelters are earning good profits with their margins on primary aluminum smelting averaging Yuan 1,264/t for September. This was a comparatively high level, given the record over the past two years, and could be a stimulus for smelters to boost production, according to an industry source in East China’s Jiangxi province.
The cost of alumina, the smelters’ crucial input cost, remains low for now, with Mysteel’s national average price for alumina continuing to decline since late June to hover currently at a low Yuan 2,694/t including the 13% VAT as of October 18, despite a mere week-on-week increase of Yuan 1/t.
Prices of other raw materials such as prebaked anodes and aluminum fluoride also declined, but their proportion in the smelters’ overall production cost is rather low, and their influence on total costs is much weaker than alumina.
For October, Shandong Weiqiao Aluminum lowered its procurement price for prebaked anodes by Yuan 25/t compared with the previous month, according to the Jiangxi source.
Written by Anna Wu, wub@mysteel.com
Edited by Russ McCulloch, russ.mcculloch@mysteel.com
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