High China aluminium ingot stocks could be the new normal

Aluminium ingot stocks in China major markets will continue to keep rising in the short to medium term, Shanghai Metals Market (SMM) predicted after surveying warehouses in Shanghai, Wuxi, Nanhai, Hangzhou and Gongyi.

The rise in aluminium ingot stocks is striking because of the fact that this is the peak-demand season in aluminium cycle when the consumption is supposed to be high. However, destocking in the domestic market is lower than expected.

As on Friday last week, May 5, total aluminium ingot stock in the aforesaid markets stood at 1.23 million tonnes, up 20,000 tonnes from the previous week, SMM data showed.

The trend is unlikely to reverse in the coming weeks as downstream industry players are either all stocked up or going slow with their operations.

At the export front too, aluminium ingot shipments to the overseas markets have dropped significantly. Primary aluminium export from China totalled 445 million tonnes in March 2017, down 91.44 per cent year-on-year. January-March three month cumulative aluminium exports were also down at 679 million tonnes.

Moreover, the U.S. Commerce Department has launched a probe into Chinese aluminium imports as they have been found to be affecting the U.S. aluminium industry rather badly. All these factors have suppressed the demand for Chinese aluminium ingots resulting in building of stocks, SMM observed.

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