China aluminium smelters meet to discuss 'irrational' price spike (updated)

China Hongqiao

31/08/2021 13:03

* China metals association calls meeting of 10 aluminium
smelters
    * Shanghai aluminium hits 13-yr peak; London price at decade
high
    * Exaggeration of tightness keeps driving prices up -ascn
official

 (Adds comments from association official, London price
milestone)
    By Tom Daly
    Aug 30 (Reuters) - The China Nonferrous Metals Industry
Association (CNIA) held a meeting of the country's top aluminium
smelters on Monday to address what it described as an
"irrational surge" in aluminium prices, which hit a 13-year high
in Shanghai.
    Aluminium on the Shanghai Futures Exchange  SAFcv1  touched
21,550 yuan ($3,332) a tonne on Monday, the highest since August
2008, as production curbs in key Chinese smelting regions -
often aimed at easing the strain on the power grid - spark fears
of tight supply.  urn:newsml:reuters.com:*:nL1N2Q10HM
    Benchmark aluminium prices on the London Metal Exchange
 CMAL3  notched a 10-year peak on Tuesday.  urn:newsml:reuters.com:*:nL1N2Q20B8
    The 10 companies that participated in the CNIA video meeting
included Aluminum Corp of China Ltd  601600.SS , or Chalco, and
China Hongqiao Group  1378.HK . 
    Participants agreed there was "no obvious gap" between
supply and demand in the third-quarter aluminium off-season and
that they would strive to cope with rising costs by improving
efficiency, said the CNIA statement.
    "Companies will continue to ensure supply and stabilise
market expectations," it added.
    In a Q&A with a CNIA publication on Tuesday, an unidentified
association official admitted there had been many constraints on
Chinese aluminium production this year, but said
"over-interpretation" of them in the market was the main reason
prices keep rising and that talk of tight supply was
exaggerated.
    Aluminium price speculators "should not underestimate ...
the government's determination to stabilise commodity prices,"
the official added. China has frequently blamed speculators for
driving up the price of key commodities this year. 
    Shanghai aluminium is up more than 37% year-to-date even as
China releases strategic metal reserves to try to ease the cost
pressure on manufacturers.  urn:newsml:reuters.com:*:nL1N2PY0BI
    The 10 smelters agreed that keeping aluminium prices "within
a reasonable range is conducive to the stability and long-term
development of the industry," the CNIA statement said of
Monday's meeting. 
    "We will ... take the lead in maintaining the order of
commodity market prices and creating a good industry ecology,"
it added.
    ($1 = 6.4682 Chinese yuan renminbi)

 (Reporting by Tom Daly
Editing by Susan Fenton and Mark Potter)
 ((tom.daly@thomsonreuters.com; +86 10 5669 2119;))