The Aluminum Material Cost Is Rise With Fluctuation in The Recent Month
Oct 15, 2024
On October 14th, the overnight Shanghai aluminum main force 2411 closed at 20880, down 55, while LME aluminum closed at 2596, down 42; In terms of spot goods, there has been an increase in shipments from holders in the Foshan market, resulting in a decrease in quotations with a discount of 10 to a premium of 10. In the Wuxi market, the basis of holders has strengthened, leading to increased profit taking and an average quotation of 10 to a premium.
On October 12th, the State Council Information Office held a press conference to introduce the relevant situation of "increasing the anti-cyclical adjustment of fiscal policy and promoting high-quality economic development". At the meeting, the Ministry of Finance stated that a package of targeted incremental policy measures will be launched in the near future to stabilize growth, expand domestic demand, and mitigate risks.
In terms of inventory, it continues to decrease. According to SMM data, on Monday, October 14th, the social inventory of aluminum ingots in major domestic spot markets was reported at 656000 tons, a decrease of 21000 tons from October 10th. During the same period, the social inventory of steel-linked aluminum bars was reported at 147500 tons, a decrease of 0.05 tons from October 10th.
In terms of supply, the 550000-ton project in Zhundong, Xinjiang Agricultural Sixth Division, was electrified and put into operation in early October. After the complete replacement of the project, an additional 200000 tons were added. Anshun Zhongtai Xinbo started resuming production of 133000 tons in mid-September; Yunnan electrolytic aluminum will no longer have power restrictions by the end of the year.
Aluminum logic and strategy suggestions: The surge in alumina prices has boosted the cost support of electrolytic aluminum, and the strong performance of aluminum inventory and spot price markups has strengthened price support. It is expected that Shanghai Aluminum will maintain a high level of volatility, with significant resistance above due to the overall supply and demand performance being average.
In terms of alumina, the main overnight alumina player, 2411, closed at 4789 on the 14th, up 65%. The average price of Shanxi's three networks was 4407, up 78%. The FOB transaction price in Australia rose to 642 US dollars, and spot prices both domestically and internationally continued to rise, reflecting the shortage of spot supply.
In terms of supply and demand, the tight supply situation has improved, and the supply side has remained stable. However, the recent production of multiple projects and winter storage and stocking needs on the demand side have led to a temporary mismatch between supply and demand. In terms of supply, Huasheng Phase II is expected to start feeding 2 million tons by the end of this month, and it is expected to achieve the production target of two lines in the first quarter of next year; The Weiqiao 4 million ton relocation project has started 1 million tons of feeding and is expected to produce products by the end of the month. It is expected to start two lines totaling 2 million tons by the end of the year. According to research data from Aladdin (ALD), as of Friday, October 11th, the completed production capacity of alumina was 104.02 million tons, with an operating capacity of 88.85 million tons (an increase of 2.4 million tons from before the holiday), and the operating rate was 85.42%.
In terms of inventory, the overall inventory level of warehouse receipts and supply and demand sides is relatively low. According to research and statistics from Aladdin (ALD), as of Thursday, October 10th, the national alumina inventory was 3.243 million tons, a decrease of 35000 tons from last week. On Monday, October 14th, the alumina delivery warehouse of the previous trading day was about 101800 tons, an increase of 6900 tons from the previous trading day. The factory warehouse remained unchanged: the Zhongzhou factory warehouse of China Aluminum Corporation was 9000 tons, and the Shandong factory warehouse of China Aluminum Corporation increased by 4500 tons.
Aluminum oxide logic and strategy: low warehouse receipts, low inventory, shortage of spot supply, continuous price increases, and stimulating high market sentiment. Although the fundamental factors are strong, the trading sentiment in the market is overheated. Pay attention to the risk of sentiment reversal. Short-term recommendations include buying at low prices and increasing demand in the near future, with a focus on medium to long-term expectations. Considering the high production capacity in the long term, it is advisable to adjust the price difference and adjust the price accordingly.
