Chinese Al producers conduct hedge, capping the rise on SHFE

摘要

After the Chinese Spring Festival holidays, Chinese primary aluminum prices take the cues from the bullish LME aluminum but the rise on domestic aluminum market has been curbed by the aluminum producers' hedge activities on the Shanghai Futures Exchange(SHFE), trading sources show. Some Chinese smelters had missed the chance to conduct hedge on futures market last year, so they are now very afraid to lose the opportunity again. Moreover, most of smelters could not earn profits and some even lost money last year and most market players are not optimistic on Chinese aluminum prices this year due to oversupply. Therefore, smelters seem to have lowered the expected price level for hedge this year. Based on the current alumina price and power rate, the Chinese smelters' average production cost stands at around 16,000yuan/tonne(USD1,933).