Market Update: Aluminum Alloy Market

2020-12-02 15:31:17

In the past month, the market price of aluminum alloy in China soared by over 15%, reaching a 3-year height. LME price synchronically rose to a 2-year peak. There is yet no sign of any weakening of the uptrend. Some analysists attribute the soaring market to Chinese government’s control over furnaces to reduce air pollution in the winter. On the other hand, the recovery of demand from all over the world has helped push up the metal price. We project the peak price cannot last more than three months as the world economy is still suffering from the pandemic. Also, with the Chinese New Year approaching, all aluminum extruders in China will take a 1-1.5 months’ break and down-stream demands will drop sharply during the time.

(Weekly trend, Shanghai Future Index of Aluminum Alloy)

(Weekly trend, LME3)

On the other hand, USD/RMB exchange rate has dropped over 8% in the past five months, to a 2.5-year low. The international shipment costs, however, have ast doubled since March

(Weekly trend, off-shore USD/RMB exchange rate)

All these factors jointly boosted up the export prices of aluminum profiles from China. This will surely quench the international demand, which has recovered for barely three months.