Aluminium smelters would increase production cut move when many of them lose money under less than US$ 1,800 per tonne of primary aluminium price. Chinese buyers increase the purchase by using price gap between cheaper price at London Metal Exchange and higher price at Shanghai Futures Exchange. The purchase volume is small due to limited availability even with US$ 240 per tonne of premium, according to Japanese trading firm sources.World smelters reduced the output by around a million tonnes after the primary aluminium price decreased to less than US$ 2,000 per tonne in late 2011, according to Japanese trading firm. The source expects the smelters increase the production cut volume under the price level while they reduced the output by around 3.5 million tonnes after Lehman shock. Major smelters reduced the production worldwide since December 2011 due to various reasons including bad weather, loss making and limited availability of power supply. Aluminium smelters’ cash cost is estimated to be around US$ 2,100 per tonne in world average. Japanese trading firm source estimates around 20-30% smelters cannot make money at the market price. Chinese buyers increase the primary aluminium purchase when the price at London Metal Exchange is around US$ 200 per tonne lower than the price at Shanghai Futures Exchange. A trading firm source said the firm got orders with more than 1,000 tonnes at US$ 230-240 of premium from Chinese buyers while the deals are thin due to limited availability.
LME Settlement prices05/08/2013
Japan Steel Scrap Composite Prices (Sangyo Press)05/10/2013
|22100YEN (-200)||25300YEN (-200)|
|US$216.75 (-1.96)||US$248.14 (-1.96)|
* Average of Tokyo, Osaka and Nagoya prices
* What is Japan Steel Scrap Composite Prices