Aluminum prices moved down on July 26th

According to the Commodity Market Analysis System of Business Society, the average price of domestic aluminum ingots in the East China market was 18346.67 yuan/ton on July 26, 2023, with a daily increase of 0.05%.

In the long term, the current price is in the sideways range after a high price decline, and has been fluctuating in the range of 18200 to 18600 yuan/ton.

Overview of Fundamentals

Supply side: During the rainy season in southwestern China, with the lifting of power load restrictions in Yunnan, it is expected that 1 to 1.3 million tons of production capacity will resume production. As Yunnan continues to promote the resumption process, the impact of power restrictions in Sichuan is temporarily limited, and there are expectations of an increase in domestic electrolytic aluminum supply.

On the demand side: The overall consumption trend continues in the off-season, and the weekly operating rate of downstream processing enterprises is expected to decrease month on month. It is likely that there will be no significant improvement near the off-season in the future. The overall weakness of terminal real estate is still weak, but there is support for the completion end of the short-term insured delivery policy, with weak data on new construction projects, and stronger demand for aluminum downstream in the near term than in the long term; Looking forward to the growth of new energy vehicles, photovoltaic, and ultra-high voltage industries in the later stage.

High probability of aluminum price crossing

Aluminum ingot inventory is still at a historical low level, and Yunnan production is expected to release. From a cost perspective, in terms of alumina, due to the resumption of electrolytic aluminum production capacity in Yunnan and the news that local alumina production capacity will be reduced due to mine reclamation in Henan, the short-term volatility of alumina prices is relatively strong, and the cost support is slightly strengthened. Short term supply pressure may become prominent at the end of July, and it is expected that the social inventory of aluminum ingots will accumulate in July. Short term aluminum prices will move sideways around the 18300 price range.