Aluminum prices exceeded 19000 yuan/ton in August

 

According to the Commodity Market Analysis System of Business Society, as of August 31, 2023, the average price of domestic aluminum ingots in the East China market was 19173.33 yuan/ton, an increase of 0.68% compared to the previous trading day and 18596.67 yuan/ton, an increase of 3.10% compared to the beginning of the month (August 1).

 

In the long term, the current price is in a sideways range after a high decline, and has been fluctuating below 19000 yuan/ton since May, currently exceeding 19000 yuan/ton.

 

Positive policies

 

The Implementation Plan for Carbon Peak in the Industrial Sector of Yunnan Province shows that in order to prevent blind expansion of production capacity in the electrolytic aluminum industry, the policy of capacity replacement is strictly implemented.

 

Overview of Fundamentals

 

Enhanced raw material benefits:

 

The continuous production restrictions in the Sanmenxia area of Henan Province, coupled with the planned restart of an aluminum oxide enterprise in Inner Mongolia, involve a production capacity of approximately 500000 tons. The routine equipment maintenance work of some aluminum oxide enterprises in Shandong and southwestern regions, as well as the increase in overseas bauxite prices, have jointly exacerbated the problem of tight supply of bauxite. The cost of aluminum oxide has increased, and the price of aluminum oxide has been firm.

 

2. Steam coal is affected by news and has positive support in the short term.

 

Increased pressure on the supply side

 

Supply side: With the resumption of production by electrolytic aluminum enterprises in the southwest region, the current production capacity is at a relatively high level. At present, the resumption of production in Yunnan region has come to an end. Although the current production capacity is relatively high, the proportion of aluminum water is still high, and the supply of aluminum ingots is still tight. The production of electrolytic aluminum in July was 3.481 million tons, a year-on-year increase of 1.5%; The cumulative production from January to July was 23.618 million tons, a year-on-year increase of 2.8%. In August, with the release of production capacity in the Yunnan region, there are still expectations of production capacity growth.

 

Good inventory performance

 

In terms of social inventory, following the start of destocking in the second half of July, inventory is relatively low. As of August 28th, the mainstream social inventory of electrolytic aluminum ingots in China was 457000 tons, which was 506000 tons compared to July 31st, and 49000 tons were removed from inventory. The inventory accumulated slightly on a weekly basis, but the year-on-year data shows that it is still at a low level in the same period of the past five years.

 

Poor export data

 

Import and export: According to statistics from the General Administration of Customs of China, in July 2023, China exported 489700 tons of unwrought aluminum and aluminum products, a year-on-year decrease of 24.9%; From January to July, the cumulative export volume was 3.2964 million tons, a year-on-year decrease of 20.7%. In July, China imported 231400 tons of unwrought aluminum and aluminum products, a year-on-year increase of 20.1%; From January to July, the cumulative import volume was 1.4319 million tons, a year-on-year increase of 12.2%.

 

The demand has slightly decreased compared to the previous month, and the value is relatively good

 

The weekly operating rate of downstream processing enterprises has slightly increased compared to the previous month, and the profile sector has slightly improved.

 

Terminal demand side: In July, world car sales reached 7.15 million units, a year-on-year increase of 6%, still slightly lower than July 2018 by 2%. From January to July, world car sales reached 49.6 million units, a year-on-year increase of 10%.

Future market forecast

 

At present, the production capacity of electrolytic aluminum is operating at a high level, but the high aluminum water ratio has led to a low mainstream inventory of aluminum ingots in society, and the spot supply of aluminum ingots is relatively tight. The price of raw alumina is strong, and the relatively strong downstream demand is also supporting the upward trend of aluminum prices. It is expected that aluminum prices will experience strong fluctuations in the short term.

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