Aluminum prices slightly declined in September
According to the Commodity Market Analysis System of Business Society, the average price of domestic aluminum ingots in the East China market on September 28, 2023 was 19856.67 yuan/ton, an increase of 1.26% compared to the aluminum price of 19610 yuan/ton at the beginning of the month (September 1).
In the long term, the current price is in a sideways range after a high decline. Since May, the price has been fluctuating below 19000 yuan/ton, breaking through 19000 yuan/ton at the end of August. In September, aluminum prices fell first and then rose, with an overall upward trend of volatility.
Overview of Fundamentals
The weekly production is around 820000 tons
The domestic weekly production in September was around 820000 tons. Electrolytic aluminum supply exceeded expectations and resumed production in the third quarter. With the resumption of production of electrolytic aluminum enterprises in the southwest region, the current production capacity is at a relatively high level. Although the power cuts and production cuts in Sichuan have sparked concerns in the short term, the interference has gradually weakened due to the small scale of the reduction and the improvement in precipitation in Sichuan. At present, the operating capacity in Yunnan region is relatively high.
From a regional perspective, the price difference between aluminum in South China and East China has recently expanded significantly in China. From the perspective of the flow of goods, there is a phenomenon of arbitrage in the shipment of goods from South China to East China. It is expected that some South China holders will carry out cross regional arbitrage in the inventory of East China. In the future, the spot pressure in South China may decrease, and the East China region may show a state of accumulated inventory after the holiday, with the addition of imported goods and supplies from other regions such as South China.
Social inventory increased first and then decreased in September
In terms of social inventory, following the start of destocking in the second half of July, inventory is relatively low. In September, social inventory first increased and then decreased.
As of September 28th, the social inventory in the mainstream areas of domestic electrolytic aluminum ingots was 473000 tons. Compared to September 21st, there were 33000 tons of inventory removed. However, compared to August 31st, the inventory was 457000 tons and the accumulated inventory was 16000 tons. Based on year-on-year data, it is still at a low level in the same period of the past five years.
On September 29th, LME aluminum inventory recorded 486100 tons, a decrease of 4225 tons or 0.86% compared to the previous day; In the past week, LME aluminum inventory has increased by 3750.00 tons, an increase of 0.78%; In the past month, LME aluminum inventory has decreased by 31300 tons, a decrease of 6.05%.
Less than expected on the demand side
In terms of demand, there has not been an improvement in the orders and operating conditions of construction factories in Shandong, Guangdong and other regions, and some small and medium-sized construction profile processing enterprises have not yet received new orders. The downstream peak season effect is not as significant as expected during the peak season. At present, downstream aluminum bars and other primary processing enterprises in the aluminum industry maintain stable production during holidays, and there are basically no plans to suspend production for holidays. It is expected that the proportion of domestic aluminum water will remain stable during the festival, and the amount of ingots cast during the festival will not surge.
Future market forecast
Electrolytic aluminum production enterprises mainly maintain stable production, and the growth rate of operating capacity has significantly slowed down. Currently, aluminum ingot inventory continues to be low, which provides some support for aluminum prices. Currently, supply is sufficient, and demand is less than expected. In the peak season of the future market, demand needs to be fulfilled. It is expected that low inventory will continue to dominate the market trend in the short term, and aluminum prices will fluctuate strongly.