Price drops as China’s Curtailment falls short of expectations
December 2017
AME reports the global average aluminium spot prices (ex-China) averaged US$2,141/t (US$0.97/lb) in November, a drop of 0.9% from the October average of US$2161/t (US$0.98/lb). The range of AME spot prices over the month has widened, with prices from US$2095/t up to US$2190/t, closing the month at US$2102/t.

In China, the monthly aluminium spot price for November, including 17% Value-Added-Tax (VAT), fell through the month, from US$2,445/t (US$1.11/lb) at the start, to a closing value of US$2236/t (US$1.01/lb). In November aluminium price softened worldwide, AME interprets the decline as a combination of China’s winter curtailment falling short of market expectations, higher total inventories and weaker demand as the holiday season approaches.

The combined stocks reported on the major exchanges (LME, SHFE and COMEX) increased from 2.45Mt to 2.52Mt at the end of November, LME inventory continued to shrink to 1.11Mt, whereas SHFE inventory steadily grew to 1.36Mt and COMEX inventory rebounded back up to 44kt.  At the end of the month, the LME stocks had reached a new nine-year-low position at 1.11Mt continuing an almost 4 year decline, with all three major warehouse regions reporting inventory reductions—74kt in the US, 501kt in Asia and 537kt in Europe. SHFE deliverable stocks, on the other hand, continued to grow, reaching a new peak since 2013, with 702kt of deliverable stocks and 657kt of warrant stocks.

Alumina prices, FOB Australia, started to fall at the end of November after peaking at US$485/t, averaging US$482/t, for a 4.6% month-on-month increase. In China, the national alumina spot prices fell consistently, from US$565/t to US$532/t, averaging US$556/t. With smelters understood to be holding sufficient stocks and expecting further price declines, alumina imports stalled as consumers watched the market. 

In mid-November, China’s winter curtailment policy, limiting ~30% of production at refineries and smelters in the “2+26+3” regions, has officially started and thus the supply and demand balance should be able to more accurately evaluated.