Antaike points the finger for declining scrap supplies to falling imports and decreases in recycling activity registered since the end of the Lunar New Year. “Price spread between aluminium scrap and primary aluminium narrowed obviously, leading to increasing amount of primary aluminium as a substitute and driving its demand,” Antaike said in a note quoted by Reuters.
However, the research center warns that the extra consumption of primary metal is only a fraction of total inventories and is “not sustainable”.
Separately, premiums for spot aluminium princes over the Shanghai Futures Exchange (ShFR) continued to grow due to strong demand. Prices were around 12,250-12,270 yuan/mt in east China’s Shanghai and Wuxi in morning trade, with premiums of 30-50 yuan/mt over the May contract on the Shanghai Futures Exchange. That was slightly up from 20-40 yuan/mt on Tuesday morning.
The two trends were echoed by Rio Tinto in its Q1 production results. “Demand in China continues to recover,” the company noted in the report. “In the rest of the world, the outlook is more uncertain. Commodity supply is being disrupted as Covid-19 restrictions impact supply chains and people movement globally.”
China’s demand for both iron ore and bauxite grew in the first quarter, according to the company.
“To some extent, weaker commodity prices also reflect decreasing industry supply costs, which are falling due to a strong US dollar and tailwinds from lower energy and freight costs, partly offset by Covid-19 related expenditure,” Rio Tinto said.