Aluminum price fell by 3.37% in February

 

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According to the data of Business News Agency, the average price of domestic aluminum ingots in the East China market on February 28, 2023 was 18340 yuan/ton, down 3.37% from the aluminum price of 18980 yuan/ton at the beginning of the month (February 1). After the aluminum price recovered in January, the aluminum price fell in mid-February, and the current price is at the low level in the month.

 

In the long term, the current price is in the broad range of the shock platform after the high correction, and the average price of aluminum ingot market is 17450 yuan/ton, up 5.10% compared with the recent recovery starting point (July 14, 2022). The recent high price of aluminum appeared on December 5, and the average market price of aluminum ingots was 19536.67 yuan/ton, down 6.13%.

 

Overview of fundamentals

 

1. Inventory data

 

As of February 27, the domestic mainstream social inventory was 1.251 million tons, 1.076 million tons compared with the social inventory at the beginning of the month (February 2), and 185000 tons accumulated.

 

2. Production data

 

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In January, China’s domestic primary aluminum output was 3.4 million tons, with an average daily output of about 110000 tons, slightly lower than that in December last year. Regional supply: Sichuan and Guangxi continue to resume production, with a total of 16 tons expected to resume production in February; Gansu and Inner Mongolia’s new investment is expected to reach 40000 tons this month; Yunnan is expected to reduce production by 3.7-80 million tons; Overall, at the end of February, the production capacity of electrolytic aluminum fell back to 39.6 million tons.

 

3. Downstream commencement

 

By the end of the month, the operating rate of domestic leading aluminum downstream processing enterprises had risen to 61.8%. From the perspective of products, the operating rate of aluminum strip and aluminum foil plate is relatively good, except for aluminum alloy plate. Downstream operation has a positive trend as a whole, and it is expected that the short-term operation rate will maintain an upward trend.

 

Macroscopic factors

 

The minutes of the meeting of the Federal Reserve from January 31 to February 1 said that most officials supported the interest rate increase by 25 basis points, because the slower pace “will enable them to better evaluate the progress of the economy in reducing the inflation rate to 2%.” However, a “small number” of participants at the meeting directly supported the interest rate increase by 50 basis points, or said that “they may support” the interest rate increase by 50 basis points at that time. The US PCE data in January outperformed expectations, which may push up the expectations of the Federal Reserve for higher terminal interest rates to some extent. The US dollar rose strongly, and non-ferrous commodities were under pressure as a whole. The expectation that the Federal Reserve will increase the tightening force has made the aluminum price downward under pressure.

 

Aftermarket forecast

 

On the supply side, the recent production reduction of boots in Yunnan has been implemented, and the production reduction capacity is slightly higher than expected, and the positive expectation in the early stage is gradually digested. From the inventory data, the downstream consumption has improved, the operating rate of processing enterprises has risen significantly, but it is less than expected, the social inventory of electrolytic aluminum has increased slightly, and it is still in the trend of accumulation, and the inventory of downstream aluminum rods is still out of stock. In the short term, electrolytic aluminum will be suppressed by macro factors, and it is expected that the operation will be mainly weak, and the downstream consumption will be seen in the future.

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