Incremental Momentum Strong International Aluminum Prices Fluctuate Up

Since the beginning of this year, aluminum prices in the international market have shown a fluctuation pattern of "first suppressing and then rising, external strength and internal weakness". In early January, aluminum prices rose rapidly due to the impact of geopolitical conflicts and energy costs. In February, there was a brief correction due to macro policy uncertainty; By mid-March, aluminum prices had risen again in the context of the intensifying contradiction between global supply and demand. For example, the closing price of Shanghai Aluminum on March 10 was 20,760 yuan/ton, up 1,580 yuan/ton year-on-year, an increase of 8%; Lun Aluminum on March 10 spot settlement price of $2,716 / ton, up $507 / ton, an increase of 19%. It can be seen that for a period of time, aluminum prices are in the "high - callback - and then break" shock mode.

The supply side continues to tighten

On the supply side, the tight supply situation of bauxite continues. Overseas production capacity due to the late start time and the operation cycle has strong uncertainty; some institutions expect that the existence of 550,000 tons of production capacity in the middle of this year can constitute the main increase in the second half of the market. In addition, aluminum mining in some countries is affected by natural conditions and political factors, and the supply is not stable enough, which further aggravates the tight supply situation. Looking at the domestic situation, China's aluminum production capacity is currently close to full capacity, and the new supply capacity is limited.

In early March, JPMorgan Chase had predicted that the global aluminum market would tighten significantly, with a shortfall of more than 600,000 tons in 2025, and it expected prices to rise to $2,850 / ton by the fourth quarter. Bank of America's forecast for average aluminum prices in 2025 is as high as $3,000 / ton. According to the judgment of mainstream authorities, international aluminum prices are expected to remain high in the coming period, and even if there is some room for growth.

Structural growth on the demand side

Now look at the demand side. The demand for aluminum in emerging industries has shown a booming trend, and new energy vehicles, photovoltaic installations, and power grid investment have strongly driven the consumption of aluminum, to a considerable extent, offsetting the impact of the decline in real estate aluminum. Taking the automotive industry as an example, in order to achieve the goal of energy saving, emission reduction, and lightweight, the application ratio of aluminum in automotive manufacturing continues to increase, from the engine block to the body frame, and aluminum is everywhere, which greatly increases the demand for aluminum.

In addition, the trend of "aluminum instead of copper" has accelerated. High copper prices have pushed the alternative demand for aluminum in the field of power and home appliances, further boosting expectations of aluminum consumption.

Energy and policy shocks

Fluctuations in energy costs also affect aluminum production. The ongoing conflict between Russia and Ukraine has led to fluctuations in the price of natural gas in Europe, putting upward pressure on the production cost of aluminum enterprises, and forming a strong support for the maintenance of high aluminum prices.

At the same time, the broad adjustment of trade policies in major economies has also caused disturbance to aluminum prices. On March 12, the US imposed 25% tariffs on imported steel and aluminum. Global Trade Alert (GTA) economists said extending the 25 percent tariffs on steel and aluminum to their derivatives would hit 289 different product categories. The tariff policy of the United States will lead to a change in the global aluminum trade pattern, further affecting the market supply and demand balance, and then promoting the fluctuation of aluminum prices.

What about the future trend

In the past two months, the trend of aluminum prices in the international market has been complex and volatile, which has been affected by a variety of factors such as supply constraints, strong growth in demand in emerging areas, and the macroeconomic environment. In the short term, aluminum prices may experience high volatility. In the long run, the new energy revolution and carbon-neutral goal will continue to reshape the supply and demand patterns. Aluminum's lightweight attributes make it a core candidate for "future metal", in the long-term supply and demand gap and cost support, the upward trend is difficult to reverse.

However, the trend of aluminum prices in the international market still faces many uncertainties. On the supply side, if some planned production capacity projects are accelerated, or the supply of aluminum ore in some regions is restored to stability, it is expected to improve the tight supply situation. On the demand side, although there is strong demand in emerging sectors, uncertainties in global economic growth may affect overall demand. In the macroeconomic environment, the turn of monetary policy and the escalation of trade frictions may have a restraining effect on aluminum prices. In the future, aluminum prices will continue to fluctuate under the interweaving effect of these factors.