SHANGHAI, Jan 23 (SMM) – Stimulus measures by the Chinese government to boost downstream consumption could buoy prices of primary aluminium after Chinese New Year (CNY).
Even as costs are likely to extend declines, a potential drop in social inventories caused by stronger downstream consumption would rekindle the upward momentum in aluminium prices, SMM expects.
China plans to introduce policies to boost domestic spending on items such as autos and home appliances this year, Ning Jizhe, vice chairman of National Development and Reform Commission (NDRC), said earlier this month.
This is in addition to stimulus measures in the second half of 2018 and upcoming tax cuts.
China’s housing market is likely to see broad-based completion of construction in 2019, which would expand aluminium consumption.
Aluminium consumption declined in January as CNY approached. Operating rates across manufacturers of aluminium sheet/plate, strip, foil and sections are all expected to fall this month.
SMM data for the past decade showed that social inventories of primary aluminium in China staged substantial gains in the two weeks before and after the CNY break.