24 May

How to Read Chinese Aluminum Demand Indicators

WRITTEN BY Mohit Oberoi, CFA

Chinese aluminum demand indicators

Previously, we saw that Chinese aluminum production has risen in the first four months of 2017. Along with the supply, it’s also important to look at demand indicators. In this part, we’ll look at some of China’s aluminum demand indicators.

How to Read Chinese Aluminum Demand Indicators

Car sales

The automotive sector is a leading aluminum consumer. According to the China Association of Automotive Manufacturers, China’s passenger car sales fell 2.1% YoY (year-over-year) to 2.1 million units in April 2017—the biggest yearly fall since August 2015. However, thanks to strong growth in 1Q17, China’s car sales rose 4% YoY in the first four months of the year.

China’s fixed asset investment rose 8.9% YoY in the first four months of the year. The data were lower than expected. China’s April manufacturing purchasing managers’ index missed estimates. China’s April real estate data also showed that the country’s real estate and construction activity is cooling off after 1Q17.

Outlook

Producers like Alcoa (AA) and Norsk Hydro (NHYDY) see a largely balanced market in 2017 due to higher Chinese demand. If Chinese aluminum demand surprises on the downside, we could see aluminum markets in a surplus this year. You can define a “surplus” as production in excess of demand. Having said that, it wouldn’t be wise to draw conclusions from one month of poor demand indicators. Investors should keep track of China’s economic indicators (MCHI) for a few more months.

While aluminum prices have been holding steady, alumina prices have shown weakness. In the next part of this series, we’ll see how alumina prices could impact aluminum markets (CENX) (RIO).

Latest articles

The proposed T-Mobile-Sprint merger agreement expired on November 1. Either company has the right to walk away from the transaction until a new date is set.

Since my last article about Nvidia (NVDA), the stock has risen from $196.86 to $208.57. I expect a further rise after today's earnings results.

TJX Companies (TJX) is scheduled to announce its fiscal 2020 third-quarter earnings results on November 19. Its third quarter ended on November 2.

AT&T stock is currently trending downward in today’s trading session. It’s down about 1% as of 11:52 AM ET. The stock fell after HSBC downgraded its rating.

Canopy Growth reported its second-quarter earnings results today. It's already down 16.07% on the day and is trading at 20.52 Canadian dollars on the TSE.

The EIA released its inventory report at 10:30 AM ET. WTI crude oil prices rose around 0.4% at 11:31 AM ET from their last closing level.