<China Commodities Update> Shanghai aluminium inventory was stable amid Russia-Ukraine crisis

  • The latest aluminium inventory in Shanghai society was stable at 700,000 tons representing less than one week of consumption. That was back to a level when SHFE aluminium price reached its high in Sep-21.  
  • Russia accounted for about 3.7m tons of aluminium production in 2020, or c.5% of total global. Global supply is at risk of further disrupted should the crisis escalate further.  In addition to China’s plan of output curb during the Winter Olympics, the news drove up metal price on both LME and SHFE. 
  • Since January, China aluminium market price has rebounded driving the integrated aluminium GP to exceed RMB7,000 per ton, close to 4Q21’s high. We maintain our stance on the industry’s improved earnings profile which should continue to support the sector rerating. 
  • Hongqiao (1378 HK, BUY, Business expansion on track) and CHALCO (2600 HK, BUY, Limited downside) are trading at their book against expected ROE expansion. Valuation is attractive. 

China Commodities Price Overview

Source: Bloomberg Finance L.P.S