SHANGHAI: A surge in prices for metals including aluminium is prompting users such as home appliance manufacturers in China to look for alternatives and will not help development of the industry, the country’s nonferrous metals body said on Thursday. Aluminium prices on the Shanghai Futures Exchange touched 19,000 yuan ($2,937) a tonne on Thursday, a level not seen in more than a decade, while copper on the London Metal Exchange passed $10,000 a tonne for the first time since February 2011.

Chinese metal producers have been recording their best profits in years thanks to the long-running rally, which has been spurred by signs of continued economic stimulus amid the coronavirus pandemic and rising demand.

“The price increase has many positive effects on the industry, but there are also some negative effects,” Jia Mingxing, secretary general of the China Nonferrous Metals Industry Association (CNIA), told a quarterly press conference.

“It has an impact on downstream companies,” which process metal into products, Jia said, adding these firms would face higher costs and find it hard to ensure stable profit margins due to price fluctuations.

Many downstream companies with relatively small output, including in the home appliance sector, will look for substitutes if the material is too expensive, Jia added, according to a transcript posted on a CNIA WeChat account.

“In the past, aluminium was cheap and... was used instead of other things. Now aluminium is expensive and is being replaced,” Jia said, adding that he hoped prices would stabilise at a reasonable level.

“Nowadays, rising prices have turned into a disadvantage.”

Bumper profits for China’s metal industry are meanwhile glossing over a rise in raw material and energy costs, which will definitely have knock-on effects on smelters, processors and the Chinese economy as a whole, Jia cautioned.