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SunSirs: Downstream Demand Improved, Destock of Aluminum Ingots Was Significant, and Aluminum Price Was Stronger
April 21 2023 14:14:08SunSirs(John)

Aluminum prices stopped falling and stabilized

According to the Commodity Market Analysis System of SunSirs, on April 20, 2023, the average price of domestic aluminum ingots in the East China market was 19,126.67 RMB/ton, a daily increase of 0.4%. Compared to the beginning of the month (April 1), the aluminum price was 18,676.67 RMB/ton, an increase of 2.41%.

In the long run, prices had been fluctuating sideways in the range of 17,500 to 19,500 RMB/ton since falling from high levels. Recently, it had exceeded the new high in March, and it remains to be seen whether it can break out of the fluctuating range.

Positive expectations on the supply side

On the domestic side, there were unexpected economic data in the first quarter. The expectation of tight power supply in some regions of China is beginning to strengthen; Qinghai has announced a plan for managing the electricity load during the 2023 peak summer season, which will limit local electrolytic aluminum production. Qinghai Province had built a production capacity of 2.835 million tons of electrolytic aluminum, accounting for 6.34% of China's total production capacity. Recently, Yunnan Province's power grid has implemented load management for the third time. Although the load reduction has not yet affected the electrolytic aluminum industry, considering the current tight power supply situation, especially with the arrival of summer electricity peak, it is expected to affect the output of electrolytic aluminum by large power consumers.

As of the 20th, Yunnan in China had maintained a state of initial production reduction, while Sichuan and Guangxi regions continued to resume production of the production capacity that was previously reduced, with a slight increase in operating capacity.

Downstream peak season approaching, demand returning

In the peak season of aluminum plate and foil in late April, demand continued to grow, and the aluminum water ratio increased to 70%. From the inventory data of aluminum ingots, as of April 20th, the social inventory in mainstream regions was 864,000 tons, which was 194,000 tons lower than March 30th. The specific performance of domestic downstream aluminum processing enterprises was as follows: the demand for aluminum strip and foil continued to slightly recover, and the operating rate of aluminum profiles had slightly rebounded. Recently, due to intensified competition for photovoltaic profiles, small and medium-sized enterprises had reported that their orders had been eroded; The performance of the primary and secondary alloy sectors was average due to sluggish terminal automotive consumption.

Analysis review

On the supply side, the production in April remained stable. From the inventory data, there was a trend of destocking in the social inventory of electrolytic aluminum, with significant destocking. Downstream demand started to expand, and aluminum prices wre running higher. It is expected that aluminum prices will continue their current positive trend in the short term, watching downstream consumption intensity in the near future.

If you have any questions, please feel free to contact SunSirs with support@sunsirs.com.

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