The high price of aluminum has fallen back
According to the Commodity Market Analysis System of Business Society, on April 25, 2023, the average price of domestic aluminum ingots in the East China market was 18843.33 yuan/ton, a daily decrease of 0.37%, and an increase of 0.89% compared to the aluminum price of 18676.67 yuan/ton at the beginning of the month (April 1).
In the long run, after the current high price has fallen, it has been fluctuating sideways within the range of 17500 to 19500 yuan/ton. In mid April, aluminum prices improved, breaking through 19000 yuan/ton within the month, and starting to decline this week.
Overview of recent market trends and motivations
The insufficient precipitation in the southwest and northwest has triggered a trend of reduced production of electrolytic aluminum, driving up the early aluminum price market. Recently, the hype has been released, and the high aluminum price has slightly declined.
Supply and demand fundamentals
Supply side: Electrolytic aluminum production is slowly resuming in Guizhou, Sichuan, and other regions, while new production capacity is released in Gansu Zhongrui and Baiyinhua. The drought in the southwestern region is intensifying, and attention is being paid to the trend of another reduction in production of electrolytic aluminum.
On the demand side: Downstream processing enterprises have a stable preference for operating conditions, and overall demand is expected to be positive, but the range is limited.
Inventory data: The significant decline in domestic inventory is mainly due to the increase in the proportion of aluminum to water, leading to a decrease in ingot production. At the same time, the maintenance of Xinjiang’s outbound railways has affected the shipment volume. Data shows that as of April 24th, the social inventory of mainstream regions in China was 838000 tons, which is 220000 tons compared to March 30th.
Future market forecast
From the supply side perspective, production remained stable in April, and inventory data showed a clear trend of inventory depletion in the electrolytic aluminum industry. The main game point currently lies in the actual supply and demand changes in the later stage. It is expected that aluminum prices will mainly fluctuate around 18800 yuan/ton in the short term, and we will be watching downstream consumption intensity in the near future.
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