SunSirs: Macro Factors Dominated Recent Decline, Production Cuts Supported Aluminum Prices

https://www.chemnet.com   Sep 29,2022 SunSirs

　　According to the data of SunSirs, the average price of aluminum ingots in the domestic East China market on September 27 was 18,280 RMB/ton, a daily decrease of 1.12%. Compared with the average market price of 18,360 RMB/ton at the beginning of the month (September 1), it was reduced by 0.44%. Compared with the average market price of 22,940 RMB/ton in the same period last year, a decrease of 20.31%.

　　On September 27, the aluminum commodity index was 102.18, a decrease of 1.16 points from the previous day, a decrease of 24.58% from the highest point in the cycle of 135.49 points (2021-10-19), and an increase of 88.45% from the lowest point of 54.22 points on November 24, 2015. (Note: The cycle refers to 2011-09-01 to the present)

　　Fundamentals Overview

　　Supply and demand:

　　On the supply side, the production restriction in Yunnan due to insufficient hydropower may further expand, or reach a scale of 20-30%. At present, the annual production reduction in Yunnan has reached more than 1.3 million tons. Although the Sichuan and Chongqing areas are promoting the process of production resumption, the overall supply has declined.

　　On the demand side, the peak season for demand has arrived, but the recent downstream construction shows that the growth is relatively slow. The operating rate of leading domestic aluminum downstream processing enterprises continued to increase slightly by 0.7 percentage points from last week to 67.1%. In September, the operating rate of downstream processing enterprises remained stable, and the recovery was less than expected.

　　Inventory:

　　According to statistics, as of the 26th, the social inventory of domestic electrolytic aluminum mainstream areas was about 650,000 tons, a decrease of 14,000 tons from last Thursday, a year-on-year decrease of 166,000 tons, and a monthly decrease of 26,000 tons from the end of August. As of September 26, LME aluminum inventories were 338,850 tons, down 1,500 tons from the previous day.

　　Import and export:

　　According to the latest data from the General Administration of Customs, the export volume of aluminum and aluminum materials in August 2022 was about 540,400 tons, a decrease of 17.14% month -on -month, an increase of 10.22% year -on -year. From January to August 2022, the export volume of aluminum and aluminum materials was 4.701 million tons, an increase of 31.5% year-on-year from January-August last year.

　　Market outlook

　　After the Federal Reserve’s interest rate hike in September, due to its exceptional expectations, the Eagle Pie's statement exacerbated the market's tension. The US dollar continued to rise, risk assets were under pressure, liquidity tightened, and economic recession dominated the market. aluminum market was under pressure.

　　In the short term, there is still a support from the reducing production of phased production in the short term. Watching whether the actual demand of the downstream is warmer. It is expected that the downlink space of aluminum prices will narrow in the short term.

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