OfBusiness Aluminium Dailies

6th May’23

Price

• LME opened at $2292.63/mt on Friday and closed at $2311.72/mt, was up 1.05%.
• The most traded Aluminum contract on SHFE opened at 18375 yuan/mt and closed at 18505 yuan/mt, down 130yuan/mt.
• MCX Aluminum prices opened on Rs.206.8/kg and closed at Rs.208.05/kg, was up 0.70%.

Demand and Supply

• Aluminium prices may slightly fluctuate downwards in May due to the reduction in prices by major Indian producers in line with the downward trend of London Metal Exchange prices.
• Production in Yunnan is expected to resume in June, while inventory of intermediate coil members has started to decrease.
• Costs are decreasing due to coal and anode prices, while alumina is showing signs of slowing down.
• The fundamentals are still strong, but inventories remain depleted.
  Positive drivers for aluminium include a quick improvement of actual space completion data and the export of unwrought aluminium and aluminium products data.

News

• Domestic stocks of aluminum ingots increased by 15,600 tons in May due to Labor Day holiday and lower inventory levels.
• FDIC may take over First Republic Bank as it becomes the third US bank to fail since March.
• Social inventories of aluminum ingots in China’s major markets decreased by 18,000 tons.
• Slight increase in aluminum ingot and billet stocks in South China due to holiday cargo, while Gongyi’s inventory levels remained stable.
• SFL, a commodity broker, agreed to pay a £100,000 fine to settle a trading activity investigation conducted by LME

OFB’s Opinion

• The short-term outlook for aluminum prices is cautious due to the heavy dependence on consumption-oriented situations. The limited effects of economies of scale and cost absorption should also be considered. The domestic aluminum scrap market is expected to remain stable. However, the mixed macroeconomic factors and slowing demand growth may cause aluminum prices to remain volatile in the short term. The supply of aluminum ingots in society continues to decrease, and if future final demand is lower than expected, aluminum billet inventories could rise. Bar stocks remain low and are expected to continue to decline in May, providing some support for aluminum prices. SMM predicts that aluminum prices will face downward pressure after the Labor Day holiday, but the low inventories may limit the downside.