Market Update: Aluminum Alloy Market

2021-01-06 17:45:54

The aluminum alloy prices of LME3 and Shanghai Future showed discrepant trends in the past week. LME stayed strong, implying a recovering demand from the overseas market, while Shanghai Future turned weak due to the end of production season in China. Many Chinese manufacturers of aluminum profiles as well as cast parts are reluctant to accept the still high price and reducing purchase of aluminum ingots or aluminum billets. It is unlikely for them to make adequate stock for the next production season in the coming Feb. Therefore, we maintain the view that aluminum alloy price will remain weak till Feb.

(LME3 daily trend)

(Shanghai Future Index, daily trend)

On the other hand, as the USD/CNY (or RMB) dropped to a new low at 6.4068 in 2.5 years. The exchange rate level further struck the Chinese exporters' enthusiasm, pushing up the export prices of aluminum products and further quench down the domestic demand for raw aluminum alloy. The upturn is unlikely in recent days unless there is some significant improvement in the USA and the control of pandemic around the world.

(Off-shore USD/CNY exchange rate, daily trend)