Aluminum price fell 3.13% in December
According to the data of the business community, the average price of domestic aluminum ingots in the East China market on December 30 was 18696.67 yuan/ton, a daily drop of 0.11%, down 3.13% from the aluminum price of 19300 yuan/ton on December 1.
Aluminum prices fell in December, mainly due to the fall of Lunan Aluminum, the external market, the small replenishment of stocks in Wuxi, and the weak downstream consumption.
In the long term, the average price of aluminum ingot market is 17450 yuan/ton compared with the recent recovery starting point (July 14, 2022), and the recent recovery is 7.26% higher.
Negative factors in policy:
Recently, the Tariff Commission of the State Council announced that the import and export tariffs of some commodities will be adjusted in 2023, including the export tariff of electrolytic aluminum from 15% to 30%.
The export volume of domestic electrolytic aluminum has continued to decline in the second half of 2022, which is expected to have limited impact on short-term supply and demand. But in the long run, it is not conducive to the expansion of the export volume of electrolytic aluminum.
Fundamental negative factors:
Aluminum prices fell 3.13% in December, mainly due to weak downstream demand. After the adjustment of public health policies in China, most of the domestic enterprises experienced a decline in the rate of on duty, and the operating rate of downstream enterprises was not high. As the Spring Festival approached, the demand for downstream terminals weakened. Some enterprises considered taking holidays in advance, and the dual pressure depressed downstream demand. The downstream is in the off-season, and the performance of aluminum downstream processing enterprises is weak. Among them, the operating rate of aluminum strip, aluminum cable, and aluminum foil has declined, and the demand is expected to decline further. At the same time, the expectation will gradually turn to reality, and the aluminum price will fluctuate slightly.
Although the aluminum price fell in December, it is still at a recent high. On the one hand, the price of raw aluminum oxide is strong, and cost factors support the aluminum price to some extent. On the other hand, the data of social inventory over the same period is still low.
In November, China’s bauxite output was 5.755 million tons, down 6.1% year on year. In November, China imported 11.789 million tons of bauxite, up 53.1% year on year. The price of mineral aggregate is firm, and the transportation is limited due to the epidemic disturbance in Shanxi and Henan; Construction in the north is affected by environmental protection; In addition, some alumina profits were reversed, and alumina production was moved downward. It is reported that in November, China’s metallurgical alumina output was 6.294 million tons, down 5.7% month on month and 3.2% year on year. In November, the alumina operating capacity was 76.6 million tons, and the national operating rate was 79%.
The hydropower generation in Yunnan accounts for 79% of the total power generation. The arrival of dry season will affect the hydropower supply. The production of electrolytic aluminum in Yunnan will be reduced by more than 20%, affecting the production capacity of 1.3 million tons. At the same time, the recovery of electrolytic aluminum in Sichuan is slow. Some aluminum plants in Henan plan to reduce production due to the arrival of heating season and poor profitability, which will affect the annual production capacity of about 110000 tons. Shipping in Xinjiang is affected by material resources. In the short term, the domestic transport efficiency has declined, the arrival of goods from mainstream consumer areas is still low, and the social inventory of electrolytic aluminum is still at a relatively low level in the same period of history. As of December 29, the social stock of electrolytic aluminum was 490000 tons, and the low stock level was an important short-term factor supporting the aluminum price. However, at present, with the factory inventory of 106,000 tons, the total warehouse is 506,000 tons. The month on month data is rising, which also reflects the relatively insufficient downstream consumption in the near future. There is a tendency to accumulate inventory near the Spring Festival.
Future market forecast
Near the Spring Festival, the downstream operating rate is difficult to improve. At present, the supply of aluminum ingots is relatively stable, the demand side is still weak, and the operating rate of large-scale downstream processing enterprises has further declined. On the one hand, the number of new orders at the end of the year declined, and enterprises mainly purchased on demand, with a weak desire to stock up. On the other hand, with the approaching of the peak of infection, the rate of factory arrival and the efficiency of cargo transportation have declined to some extent, and the overall consumption is weak. It is expected that the short-term aluminum price will be dominated by weak operation.