OfBusiness Aluminium Daily Market Report | 22nd March 2024

Price

• As of Thursday LME opened at $2290/ton and closed at $2310/ton. Today, the markets have opened at $2307/ton.
• As of Thursday SHFE opened at Yuan 19320/ton and closed at Yuan 19380/ton. Today, the markets have opened at Yuan 19335/ton.
• As of Thursday MCX Aluminium prices opened at Rs.205.1/kg and closed at Rs.205/kg. Today, the markets have opened at Rs.204/kg.

Demand and Supply

• The electrolytic aluminium production outlook for China in 2024 is experiencing upward revisions, with expectations that production may increase to approximately 42.9 million tons. This adjustment comes as Yunnan aluminium companies have begun to resume production earlier than anticipated, with notices issued to increase electricity load and favourable conditions in thermal power, wind power, and solar power generation.
• The resumption of production in Yunnan Province is particularly significant, starting three months earlier than the previous year and ahead of earlier projections. This early resumption, combined with production adjustments and planned projects in other key regions like Inner Mongolia, Qinghai, Guizhou, Sichuan, and Xinjiang, contributes to the revised production forecast.
• The reassessment suggests a potential increase of about 1.15 million tons compared to the initial assessment, reflecting a 20% rise. This upward revision indicates improved prospects for domestic electrolytic aluminium production in 2024, driven by early resumptions and favourable conditions in key production regions.

News

• The first aluminium premium transaction for the April-June quarter of 2024 in Japan has been concluded, with a reported premium of US $145 per ton to the average LME spot price, CIF Japan. This transaction, involving shipments of 1,000 tons or more per month, was reported by a Western producer after the Asian market closed on March 21.
• The premium of US$145 per ton represents a significant increase compared to previous quarters, marking a 60% rise from Platts’ MJP assessment of $90/ton in the first quarter of 2024. It also surpasses premiums observed in any quarter of 2023.
• Negotiations for quarterly aluminium premiums in Japan are ongoing, with market participants expecting more trade reports to emerge over the next two weeks. This transaction sets a notable benchmark for premium levels in the aluminium market, reflecting evolving dynamics and potential shifts in supply and demand dynamics.

OFB’s Opinion

• It is expected that aluminium prices will continue to be influenced by heightened buying interest, particularly from China, the largest global consumer of aluminium. The decision by the People’s Bank of China (PBoC) to maintain lending rates unchanged aims to stimulate economic activity amidst challenges from the property sector and low consumer confidence.
• Potential further cuts in banks’ reserve requirement ratios (RRR) are hinted to stabilize consumer prices. From a technical standpoint, increased buying activity is observed, with support at 207.2 rupees and resistance at 208.8 rupees.