According to the data of SunSirs, the average price of domestic aluminum ingots in East China market on August 31 was 18,453.33 RMB/ton, a daily decrease of 0.65%, compared with the market average price of 18,316.67 RMB/ton at the beginning of the month (8.1), an increase of 0.75%, and compared with the average market price of 21,240 RMB/ton in the same period last year, a decrease of 13.12%.Taking the peak in 2021 (October 19, 2021), the average market price of aluminum ingots is 24,240 RMB/ton, and the recent deviation from the peak has dropped by 23.87%. Starting from the recent recovery (July 14, 2022), the average market price of aluminum ingots is 17,450 RMB/ton, and the recent recovery has increased by 5.75%.Analysis reviewSupply side:Domestically, the electricity shortage in Sichuan has eased. Except for high-energy-load industries, large-scale industrial electricity consumption is gradually recovering. Aluminum profile enterprises in the aluminum industry are gradually promoting the resumption of work and production; electrolytic aluminum enterprises have a long start-up cycle after power cuts and shutdowns. On August 29, Zhongfu Industrial announced that it was notified by relevant departments that the production capacity of electrolytic aluminum involved in the suspension of production in Guangyuan Linfeng and Guangyuan Zhongfu was resumed in an orderly manner from August 28, 2022. At present, other companies are still in a state of shutdown; most aluminum rod companies are temporarily closed due to the lack of aluminum water supply, and some production capacity using scrap aluminum has been restored. It is expected that the supply of aluminum rods in the Sichuan market will be tight in September.Internationally, on August 30, Alcoa issued a production reduction announcement, and its Lista electrolytic aluminum plant in Norway will reduce production by one-third due to high energy costs. The aluminum plant has a production capacity of 94,000 tons per year, and the production reduction will be completed within 14 days, involving a production capacity of 31,000 tons per year.Demand side:The domestic aluminum downstream consumption continued to be weak, and the regional epidemic and high temperature power cuts interfered with the downstream construction, and the aluminum rod and aluminum profile factories in Sichuan were basically shut down.Inventory data:The social inventory in the mainstream areas of domestic aluminum ingots is relatively stable, at a historically low level, and has accumulated a little recently. As of August 29, the mainstream social inventory of aluminum ingots was 686,000 tons.
Policy-related factors:
The domestic LPR is lowered, combined with real estate-related policies, the news is positive for construction aluminum, but the impact on downstream demand for aluminum in the short term is limited. The probability of a hawkish Fed raising interest rates in September has increased, the European economy has been hit hard by energy, and the German and French manufacturing PMIs continued to fall below the 50th percentile in August, which is not optimistic. Macro factors have suppressed international bulk prices.
Market outlook
On the whole, overseas energy is still tight, Europe may face a more severe crisis of production reduction, and some electrolytic aluminum production capacity is still expected to be reduced. Domestically, the power curtailment is expected to ease, and the domestic supply is expected to improve, but the uncertainty is still strong. In the short term, aluminum prices will mainly fluctuate in a wide range, and the fluctuation range is 18,000-19,000 RMB/ton. The market outlook needs to pay attention to downstream consumption and social inventory.
