Aluminum prices turn upward in August

 

POLYVINYL ALCOHOL

In August, aluminum prices reversed the downward trend of the previous high correction and turned upwards. According to the Commodity Market Analysis System of Shengyi Society, as of August 30, 2024, the average price of aluminum ingots in the East China market in China was 19643.33 yuan/ton, an increase of 2.38% from the market average price of 19186.67 yuan/ton at the beginning of the month (August 1).

 

On August 30, 2024, the spot price of aluminum ingots (AL99.70) for China Aluminum Corporation Limited is as follows: the external quotation for the East China market is 19630 yuan/ton, the external quotation for the South China market is 19520 yuan/ton, the external quotation for the Southwest market is 19600 yuan/ton, and the external quotation for the Central Plains market is 19570 yuan/ton.

 

Monthly aluminum inventory changes

 

In August, there was a significant decrease in inventory in the electrolytic aluminum plant area, and social inventory first decreased and then increased, basically stable, with a slight accumulation of inventory overall.

 

As of August 29th, incomplete statistics show that the main electrolytic aluminum plant inventory in China is 53000 tons, which is 88000 tons compared to the main plant inventory on August 1st, and 35000 tons have been unloaded;

 

As of August 29th, the mainstream social inventory of aluminum ingots in China was 808000 tons, compared to the main factory inventory of 803000 tons on August 1st, with a cumulative inventory of 5000 tons.

 

Reasons for the rebound of aluminum prices in August

 

On the macro news front, the expectation of the Federal Reserve cutting interest rates is good. The minutes of the Federal Reserve’s FOMC meeting in July suggest that there is a high possibility of a rate cut in September, with the largest decline in non farm payroll in 15 years in the year ending in March, raising market bets on a significant 50 basis point rate cut in September from 29% to nearly 39%.

 

2. Low inventory of raw material alumina, firm prices, and cost driven positive aluminum prices.

 

3. In the off-season of aluminum processing in August, the inventory data of electrolytic aluminum shows good domestic supply and demand. As of August 22, the inventory of electrolytic aluminum in mainstream areas was 790000 tons, compared to the inventory of 803000 tons on August 1 at the beginning of the month, with 13000 tons sold out. At the same time, the expectation of the traditional peak season of “Golden September and Silver October” has further boosted market expectations.

 

Factors affecting aluminum prices in September

 

At the macro level, the optimistic sentiment brought about by the expectation of the Federal Reserve’s interest rate cut in September has gradually been digested, and the benefits have basically been reflected in the price level. The subsequent boosting effect has weakened.

 

2. Changes in medium and long-term demand and export expectations. Mainly due to the pessimistic long-term expectations in the downstream market, partly due to the seasonal off-season of household appliances, and partly due to the significant pressure on real estate completion, the negative feedback effect of aluminum consumption is strong; More importantly, in terms of exports, the additional tariffs on new energy vehicles in the second half of the year may gradually be implemented, and photovoltaic exports are also facing certain pressure.

 

3. In recent times, on the supply side, Yunnan electrolytic aluminum enterprises are nearing the end of resuming production, with high daily output and narrowing upward space; Overseas New Zealand direction, due to power shortages, supply has slightly decreased. On the demand side, downstream sectors have seen a rebound in operating rates, with electrolytic aluminum and aluminum rod inventories both experiencing a slight destocking.

Overall, analysts from Shengyi Society believe that electrolytic aluminum will experience strong fluctuations in the short term, but the upward space is narrowing. In the short and long term, the performance will be mainly strong at first and then weak.

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