Al price ratio down to historic lowest level due to soaring stocks

摘要

The SHFE aluminum futures contract prices nosed down in recent trading days, hit by the soaring stocks at the SHFE reported warehouses. The price ratio of the SHFE-3 month aluminum to the LME-3 month aluminum has declined to 8.0-8.3, the lowest level to date. The ratio was around 10.0 during 2002-2004 and down to 8.5-8.9 in 2005. Over the past two months, primary aluminum price rose strongly worldwide thanks to funds buying. In China, spot price of primary aluminum ever hit 22,000 yuan a tonne(USD2,732 tax included) in early February. At the price level, most of Chinese aluminum smelters could make rich profits even though alumina price stands above USD620 a tonne(CIF to Chinese ports). Chinese top 23 smelters at the end of last year announced a production cut program, but the rising aluminum prices have also weaken Chinese aluminum smelters' solution to undertake the program.