Aluminum prices rose first and then fell in September
According to the data of the business society, the average price of domestic aluminum ingots in the East China market on September 30 was 18356.67 yuan/ton, up 1.01% daily, down 0.02% from the average market price of 18360 yuan/ton at the beginning of the month (9.1), and down 18.92% from the average market price of 22640 yuan/ton in the same period last year.
At the peak price of 2021 (October 19, 2021), the average market price of aluminum ingots is 24240 yuan/ton, and the recent deviation from the peak value has dropped by 24.27%. The average price of aluminum ingot market is 17450 yuan/ton from the recent recovery starting point (July 14, 2022), and the recent recovery is up 5.20%.
The aluminum price rose on the 30th, mainly because of market news that the London Metal Exchange (LME) may negotiate a ban on Russian metal trading. The price of Lunan Aluminum rose, and Shanghai Aluminum was also boosted. Drive spot aluminum prices up. It is reported that the annual capacity of RUSAL is about 4.5 million tons, accounting for about 6% of the total capacity of global electrolytic aluminum.
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Fundamentals Overview
Domestic supply side: Yunnan has reduced the load, and the supply and demand pattern is expected to become tight; The production capacity of Sichuan and Chongqing is under recovery, and it will take time to fully recover. According to the aluminum output data in September, the weekly output has decreased month on month.
From the output data, due to the nationwide high temperature and dry weather in August, as well as the shortage of upstream water, the hydropower station was limited. Sichuan took the lead in reducing production, which was about 980000 tons. In late August, Yunnan was short of water and electricity. Since June, the upstream water has been short. According to the communication with the aluminum plant, the current production limit in Yunnan is about 22% – 25%, which is about 1.3 million tons, Production may be further reduced in the future; As for the resumption of production, the probability of resumption of production is also small at present. On the one hand, although Sichuan has the enthusiasm to resume production, hydropower is still tight, and electrolytic aluminum smelting in Guangxi has lost money. Yunnan will stop production until the end of the dry season in June 2023.
On the overseas supply side, the European region announced a production capacity reduction of about 300000 tons this year. With the production capacity reduction of about 950000 tons in the fourth quarter of last year, the decline was significant. Recently, the electrolytic aluminum enterprises under Hydro announced production reduction due to declining demand.
On the domestic demand side, according to the inventory data, as of the 29th, the social inventory in the domestic mainstream regions was around 610000 tons, which has decreased slightly in the recent month on month. In terms of terminal demand, the demand for real estate is relatively weak, and the consumption data of durable consumer goods is beginning to improve. In particular, the performance of the air conditioning production data in August turned positive year on year. The automobile and photovoltaic fields remain strong, and the consumption in the fourth quarter will not be ruled out to improve.
Future market forecast
The bearish expectation caused by the early macro pessimism was the main factor for the price decline in late September. Fundamentally, under the impact of the production reduction news, plus the London Metal Exchange (LME) news, the impact of macro factors on aluminum prices began to fade.
In the short term, the aluminum price will be supported by periodic production reduction, and we will wait to see whether the actual demand in the downstream will turn warmer. It is expected that the aluminum price will be subject to strong and wide shocks in the short term.
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