SHANGHAI, Sep 20 (SMM) - The throughput of aluminium scrap in East China Nonferrous Metal Centre in Linyi city, Shandong province stood at about 14,200 mt during September 12-18, an increase of 4,300 mt or 43.23% compared with the previous week. The throughput of copper and stainless steel scrap in the centre was 24,700 mt and 10,500 mt respectively, up 81.31% and 88.36% on a weekly basis.
A00 spot aluminium prices remained volatile during this period, up 70 yuan/mt from the previous Friday to 18,870 yuan/mt, up 0.37% on the week. For aluminium scrap, the prices of aluminium tense and taint scrap both changed little. On the supply side, the traders were active last week to supplement the reduced transactions during the Mid-Autumn Festival holiday from September 8 to 11. Meanwhile, as some market players worried that aluminium prices would fall following the US Fed rate hike in September, the shipments in the Metal Centre further improved.
On the demand side, the news of potentially expanding production cuts in Yunnan this week (bullish) as well as the bets that the Federal Reserve may raise interest rates by 100 basis points in September (bearish) are affecting the market players’ judgement on the subsequent trend of aluminium prices. The futures market is interwinded with bulls and bears, and the most-traded SHFE 2210 fell after rising above 19,000 yuan/mt. In order to mitigate the losses, downstream scrap users are mostly wait-and-see while reducing their purchases.
To sum up, the upstream retailers have been bearish on future aluminium prices, hence were quite active in selling. The downstream players shared the same view, thus were cautious in purchasing. The market was now in oversupply.
Looking into this week, spot A00 aluminium price fell 100 yuan/mt to 18,770 yuan/mt on Monday September 19. The most-traded SHFE 2210 contract opened at 18,995 yuan/mt, and fell after hitting a brief high of 19,005 yuan/mt. The contract closed the day (September 19) at 18,710 yuan/mt, down 235 yuan/mt or 1.24% from the previous trading day. For social inventory, the SMM aluminium ingot social inventory across major markets in China totalled 685,000 mt on Monday, down 11,000 mt from the previous Monday, with Gongyi contributing most of the losses, while the inventory in Shanghai rose slightly. The aluminium scrap market is expected to remain oversupplied this week.
