Long-running rally of Chinese aluminium prices is turning into a disadvantage, nonferrous metal body warns

Aluminium producers in China have been reportedly generating the best profits in years due to the long-running rally of metal prices, driven by global economic recovery from the COVID-19 pandemic and rising demand. But amid this positive impact, the incessant surge in prices, on the other hand, is prompting many users such as home appliance manufacturers looking for alternatives, said China’s nonferrous metal body on Thursday, April 29.

"The price increase has many positive effects on the industry, but there are also some negative effects," Jia Mingxing, secretary general of the China Nonferrous Metals Industry Association (CNIA), told a quarterly press conference.

He pointed out that the most adverse impact is found on downstream companies, which process aluminium metal into products. They are facing higher costs of raw materials and finding it hard to ensure stable profit margins due to fluctuations.

As of Friday, April 30, A00 aluminium ingot price in China has reached a new high of RMB 18,830 per tonne by gaining RMB 100 per tonne from the previous day.

Jia Mingxing also said that many downstream companies with relatively small output are looking for substitutes. Earlier, the aluminium was inexpensive and could be used in place of other metals, he added. However, Jia hopes that prices become stabilise at a reasonable level.

“Bumper profits for China's metal industry are meanwhile glossing over a rise in raw material and energy costs, which will definitely have knock-on effects on smelters, processors and the Chinese economy as a whole,” Jia cautioned.

source https://www.alcircle.com/news/long-running-rally-of-chinese-aluminium-prices-is-turning-into-a-disadvantage-nonferrous-metal-body-warns-65142