Aluminium prices in Shanghai receded from a nine-year high yesterday, propelled to highs thanks to a surge in demand, news of a stimulus package in the United States, and rumors of a vaccine for COVID-19 on the way.
On Thursday, January aluminium contracts fell by 3.9 percent from a multi-year high of CNY16,925 per metric ton to CNY16,170 per metric ton. Wednesday’s high was territory the metal has not seen at the Shanghai Futures Exchange since the fall of 2011.
Meanwhile in Britain, on the London Metal Exchange the three-month aluminium contract receded from a two-year high of US$2,080 per metric ton yesterday to US$2,034.50 per metric ton.
“Demand is there and sentiment is there. We are now having trillions of dollars injected into economy,” opined a Singapore metals trader to Reuters yesterday.
“[But] if you ask me whether this trend will continue, or whether the stimulus and optimism have been priced in… I am not bullish,” he continued.
The Singapore trader went on to say that inventories typically swell around the Spring Festival in February, which is one of China’s two major holiday weeks.
Meanwhile, aluminium stocks at the Shanghai Futures Exchange traded at 220,373 metric tons, which is off by 59 percent from March. Concurrently, SMM’s social inventories were at an almost four-year nadir of 600 thousand metric tons.
Reuters also reported that statistics bureau Antaike projected a small deficit of aluminium in the Chinese market, dialing back from a previous estimate of a surplus supply for the year.