Aluminium Prices Stay Firm, Market Sees Tightening Supply Despite Record Production
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Aluminium prices remain stable despite China’s record-high production, as supply growth is expected to slow due to regulatory caps and export tax changes. JPMorgan forecasts a significant global deficit in 2025, pushing market expectations higher. Meanwhile, bauxite arrivals at Chinese ports and shipments from major exporters like Guinea and Australia have declined, further tightening supply.
Key Insights
- Aluminium Prices: LME opened at $2,695/mt, SHFE at 20,885 Yuan/mt, and MCX at Rs 263.75/kg, with prices holding steady despite market fluctuations.
- China’s Production Cap: China produced a record 44 million mt in 2024, but long-term supply is expected to tighten due to the 25 million mt cap and carbon policies.
- Infrastructure Demand: China’s increased infrastructure spending, supported by a higher budget deficit, is expected to drive aluminium consumption in the coming months.
- Global Supply Deficit: JPMorgan predicts a global aluminium deficit of over 600,000 mt in 2025 due to slower supply growth and rising demand.
- Bauxite Supply Drop: Weekly bauxite arrivals at Chinese ports fell by 681,400 mt, while shipments from Guinea and Australia also declined, impacting raw material availability.
Aluminium Price:
- As of last day, LME opened at $2699/mt and closed at $2689/mt. Today, LME opened at $2695/mt.
- As of last day, SHFE opened at 20,855 Yuan/MT and closed at 20,880 Yuan/MT. As of today, SHFE opened at 20,885 Yuan/MT.
- As of last day, MCX closed at Rs 264.60/Kg. Today, the market opened at Rs 263.75/Kg.
Aluminium Demand & Supply
- Aluminium prices increased by 0.08%, closing at Rs 264.6, supported by expectations of tighter supply despite China’s record-high production levels. In 2024, China produced 44 million mt of aluminium, a record amount. However, output is anticipated to slow this year due to Beijing's long-standing cap of 25 million mt to curb excess supply and meet carbon reduction goals. Furthermore, China’s decision to remove tax rebates on aluminium exports has resulted in lower overseas shipments, redirecting more supply to the domestic market and bolstering foreign market prices.
- On the demand side, China’s government raised its budget deficit, enabling more infrastructure spending through special bonds, which is expected to drive aluminium consumption. JPMorgan forecasts a significant tightening in the global aluminium market, predicting a deficit of over 600,000 mt in 2025, mainly due to slow supply growth. Data from the International Aluminium Institute (IAI) shows global primary aluminium production in January increased by 2.7% year-on-year, reaching 6.252 million mt. Meanwhile, China’s aluminium output in December rose by 4.2% year-on-year to 3.77 million mt, spurred by new production capacity in Xinjiang.
Aluminium Market News
As of March 7, data shows that weekly bauxite arrivals at Chinese ports totalled 3.889 million mt, down by 681,400 mt from the previous week. Meanwhile, weekly bauxite departures from Guinea's main ports were 3.2182 million mt, a decline of 898,500 mt compared to the previous week. Additionally, weekly bauxite departures from Australia's main ports stood at 836,200 mt, down by 39,200 mt from the previous week.
Expert Opinion
Aluminium is experiencing renewed buying interest, as open interest rose by 1.56% to 3,195 contracts. The metal has support at Rs 263.1, with the possibility of testing Rs 261.6, while resistance is at Rs 265.8. A breakout above this level could drive prices towards Rs 267.
Daily Market Report
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