Poor market might dampen aluminum prices in Q2

Aluminum prices in China are expected to take a hit in Q2 as the supply/demand imbalance will deteriorate, Shanghai Metals Market foresees.

On the supply side, operational aluminum capacity in China hit 30.95 million tonnes at the end of April, up some 900,000 tonnes from the end of last year, SMM data showed. The country might add over 1 million tonnes in new capacity this quarter, SMM predicts.

However, demand will not keep up pace, since June marks the beginning of the off-season for aluminum consumption. HSBC’s flash China manufacturing PMI for May was 49.1, lower than 49.3 expected, highlighting sluggishness in the manufacturing sector. This figure is a bad sign for aluminum demand.

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