Aluminum price oscillation is strong is the main tone

Release time:2022-06-14

Since November 2021, aluminium prices have shown a pattern of external strength and internal weakness. The main reason for this is the sharp rise in European energy prices, which triggered a wave of production cuts at foreign treatment refineries. In February this year, the Russia-Ukraine conflict further intensified foreign market concerns about rising electricity prices and electrolytic aluminium supply shortages, and Europe and the United States continuously increased sanctions against Russia, making the global supply tension escalate again. As the global visible inventory of aluminium ingots continued to decrease, the price difference between domestic and foreign markets reached a record high. Driven by high profits, European buyers are willing to pay high freight costs to seek sources of goods beyond 10,000 km, China's electrolytic aluminium and aluminium exports are thus at a record high.

Changes in import sources

The net import of primary aluminium for more than two years, the import source changes obviously. Divided month to see, in February, China's primary aluminum (including general aluminum and high purity aluminum) imports of about 18,300 tons, down 52.69% ring, 68.79% under the same period last year; primary aluminum exports of 2,640,000 tons, 508.63% ring, an increase of 2360%, net exports of primary aluminum 8,035 tons. Although the primary aluminium export window did not open under the 15% tariff restriction, this has been a net export since the end of 2019. This has resulted in a very significant shift in the import and export pattern of primary aluminium.

In March, primary aluminium maintained a net export pattern, totalling 2,867 tonnes. in April, China imported 34,900 tonnes of primary aluminium, down 77.6% year-on-year; China exported 32,000 tonnes of primary aluminium, up 6460% year-on-year. in January-April, China exported a total of 105,000 tonnes of primary aluminium, more than the total for 2019-2021. By country, in April, China imported 31,000 tonnes of electrolytic aluminium from Russia, an increase of 48.76% year-on-year; 896 tonnes of electrolytic aluminium from Australia, a decrease of 94.05% year-on-year. The main reason is that after the Russia-Ukraine conflict, Russia's electrolytic aluminum exports due to the European and American system planted blocked, but the amount of exports to China than last year increased significantly. Tension in foreign aluminium fundamentals and geopolitical relations greatly changed the import and export pattern of electrolytic aluminium in China.

Export volume increased significantly

Aluminum export profits maintain a historically high level, exports have increased significantly, because aluminum exports enjoy VAT rebates and no tariffs, has been China is a large aluminum exporting countries. This year, the ratio of aluminum inside and outside the plate continues to maintain a high level, China's aluminum exports increased significantly compared to previous years. According to statistics, as of June 1, aluminum sheet and strip export profit of $731.29 / ton, aluminum foil export profit of $712.71 / ton, aluminum profile export profit of $ 547.23 / ton. The three major aluminium export profits declined slightly from the beginning of March, but are still at a high level since 2018. High profits in the degree to stimulate the export enthusiasm of aluminum processing enterprises, aluminum exports increased significantly.

Downstream start-up rate declined

So far in March, the domestic epidemic makes the aluminum downstream start rate decline, especially for the aluminum processing enterprises in East China, the impact is obvious. The epidemic affects part of the order or have delay and reduce the amount, so is expected to have a drop in aluminum exports ring. According to the market research conducted by relevant institutions, we know that since April, some enterprises feedback export orders have declined. Because of the domestic epidemic affects around the aluminum sheet and strip production enterprises to start, and foreign customers learned that in April, the epidemic in East China to hinder traffic, some of our enterprises difficult to smooth delivery. So transfer orders. According to the overseas order scheduling, transportation cycle 1 a 2 months estimate, May, June aluminum and aluminum processed products export volume or less than April, but will maintain the increase compared with previous years.

At present, domestic and foreign aluminum prices to maintain a strong oscillation trend, macro sentiment than in May has warmed up. With the unsealing of Shanghai, downstream enterprises gradually resume work and production, the market demand recovery is expected to be stronger, but the domestic electrolytic aluminum supply growth rate is faster than the demand growth rate. Therefore, aluminum prices are expected to maintain oscillating strong trend in the short term, should not be overly bearish. The market needs to focus on the recovery of domestic consumption, and continue to follow up the Russian-Ukrainian conflict on the further impact of Russian aluminum and energy prices.

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