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How Will Surging Aluminum Prices Affect Downstream Aluminum Foil Producers?
- Aug 10, 2017 -

 This week China aluminum price is skyrocketing.Changjiang A00 aluminum ingot prices gained 1000 yuan/tonne over the past two trading days alone. 

 For producers of aluminum flat rolled product (FRP), namely plate/sheet, strip and foil, they settle prices based on “aluminum ingot prices + processing fees”. Aluminum ingot prices come in many ways, i.e. prices on the day contracts are signed, prices on the day shipments are made, the average price during the five days prior to shipments, weighted average price of SHFE front-month aluminum contract. So, changes in aluminum prices have different impacts on producers with different settlement ways. 

For example, most producers in Henan settle based on aluminum ingot prices on the day contracts are signed. Their downstream clients usually buy actively when aluminum prices keep rising, but show low buying interest when aluminum prices fall steadily. For Chalco’s subsidiary companies and some SOEs, they mostly settle based on monthly weighted average price of SHFE front-month aluminum contract. 

The surge in aluminum prices incurred losses on FRP producers that settle based on monthly weighted average price of SHFE front-month aluminum contract, but they could negotiate with buyers to bear the losses together. In case of big rise in aluminum prices, FRP producers usually step up production and reject some orders, while end-users show lower buying interest.The significant rise in aluminum prices has hurt consumption to some extent.

How ever pushed by urgent need some buyers also  place order for aluminum foil this week, but only to find that aluminum foil producers are not willing to accept new orders , as it said that today the aluminum price will increase by CNY 700 Tonne(or $105 ).No one can say for sure when the price will stop to rise.

It seems this moth,China aluminum market is busier than housing market.