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Strategies & Market Trends : The Epic American Credit and Bond Bubble Laboratory -- Ignore unavailable to you. Want to Upgrade?

To: mishedlo who wrote (12401)	4/22/2004 7:26:50 AM
From: russwinter	Respond to of 110194

Bottlenecks, govt policy, or uneconomical: businesses going broke? What's REALLY going on? Reuters China alumina demand dips on prices, credit curbs Thursday April 22, 6:48 am ET By Polly Yam HONG KONG, April 22 (Reuters) - China's demand for spot alumina has weakened over the past two weeks due to strong prices and the government's latest measures to tighten credit controls in the aluminium sector, traders said on Thursday. They said Chinese banks had reduced credits to smelters for alumina imports after Beijing raised bank reserve requirements for the third time in seven months in an attempt to cool red-hot economic growth to seven percent from 9.1 percent in 2003. "Smelters have been using their alumina stocks. They don't want to import new cargoes," a trader in Beijing said. A smelter source said he believed many smelters would continue to use existing stocks for another month. Traders estimated around 1 million tonnes of imported alumina were sitting in the five Chinese ports that handle most shipments of the raw material, due to a shortage of onward transport. They said reduced demand had pushed down the price of alumina, the key material for aluminium production -- but not low enough to attract new orders from smelters. In the spot market, traders saw offers for spot alumina at $510 to $515 a tonne CIF China, against $525 to $535 two weeks ago. Spot alumina changed hands at $500 to $510 a few days ago, down from about $520 two weeks ago. Smelters favoured buying locally produced alumina and duty-paid imported cargoes in Chinese ports. Domestic prices were higher than those for export and had dissuaded them from processing trades involving the import of alumina and export of aluminium, traders said. They said Chinese Customs had virtually stopped giving permits to Chinese traders for alumina imports since late 2003. Smelter sources said an expected rise in power fees from May had also been keeping smelters from committing to new imports. The price of imported alumina in Chinese ports was stable at 5,300 to 5,500 yuan a tonne as Aluminum Corp of China Ltd, China's dominant alumina producer, had kept its term price at 4,300 yuan a tonne since March 11, traders said. ALUMINIUM IMPORTS Chinese firms that had sold aluminium on the Shanghai Futures Exchange had re-imported Chinese-origin metal to meet their futures deliveries, traders said. They said firms had taken an estimated total of about 20,000 tonnes from London Metal Exchange-registered warehouses in Singapore. But falling prices on the Shanghai exchange would reduce demand for imported metal. "Some Chinese traders may cancel their booked cargoes due to arrive in Shanghai soon," one trader said. Most Shanghai aluminium contracts (0#SAF:) hit their daily limit-downs on Thursday, having also fallen the maximum three percent limit on Wednesday. Most-active October (SAFV4) aluminium fell 600 yuan to 18,040 yuan a tonne on Thursday, compared with 19,290 yuan on April 15. The June contract (SAFM4), on which many cargoes were booked for delivery, fell 610 yuan to 17,310 versus 18,480 a week ago. Traders saw offers for Chinese aluminium for June shipment at premiums of $80 to $85 a tonne CIF Shanghai or Guangdong over the LME cash price, down from around $100 in early April. Benchmark three-month LME aluminum (MAL3) was quoted at $1,707/$1,712 by 1016 GMT on Thursday. The cash price was $11/13 lower than the three-month price.