Aluminum prices fluctuate around the cost line (2)

We talked about the price of aluminum fluctuates around the cost line. We analyzed last time from the two aspects of the Fed's interest rate hike and the European aluminum production cut, and we analyzed it from other angles. Let's take a look!

China's aluminium exports are performing well, which is also a very important factor. In the third quarter, China's electrolytic aluminum processing profits remained in a low range, and aluminum prices fell rapidly in early July, and processing profits were once negative. At the beginning of October, the average profit level of electrolytic aluminum remained near the level of $110/ton, and the overall profit level remained in the low range. In terms of downstream terminal consumption, the performance of the traditional peak season this year is not optimistic, and the downstream aluminum processing enterprises have limited in starting to increase their work. At the beginning of October, the operating rate of domestic downstream aluminum processing leading enterprises remained near 67%. In September, the start of aluminum downstream processing enterprises rose slightly, but the downstream terminal consumption only picked up slightly, and the lack of new orders suppressed the operating rate of each sector. In terms of overseas markets, data show that in August 2022, China exported 540,400 tons of unwrought aluminum and aluminum materials; from January to August, the cumulative export was 4.701 million tons, an increase of 31.5% year-on-year. Due to the limited supply of overseas supply, the demand for export market continued to perform well this year.

Overseas inventories continued to decline in the third quarter. Overseas impact market due to the European region of electrolytic aluminum plants have reduced production, the supply side has been significantly compressed, so it brought about a continuous decline in LME aluminum ingot inventory, LME aluminum inventory fell to 327,600 tons in early October, compared with the high level of inventory at the beginning of the year has fallen by more than 65%.

Synthesizing the introduction of the previous article, on the one hand, the pressure of the Fed's interest rate hike cycle in the fourth quarter still exists, and the disturbance of electrolytic aluminum overseas supply will continue; On the other hand, the peak demand season in October continued to support aluminum prices to a certain extent, and aluminum prices will be under pressure again after the peak season. Therefore, under the weak pattern of supply and demand, aluminum prices will find a balance range above the cost. At the same time, we recommend that customers in Europe and the United States purchase aluminum products from our Haomei. The depreciation of the Chinese currency has a great advantage for European and US customers, while our abundant aluminum products and energy sources keep our aluminum prices on track.