SunSirs: Electrolytic Aluminum Prices Fluctuated Sideways in July and Are Expected to Continue in August

Aluminum prices fluctuated sideways in July

According to the Commodity Market Analysis System of SunSirs, as of July 31, 2023, the average price of domestic aluminum ingots in the East China market was 18,376.67 RMB/ton, a decrease of 0.93% compared to the aluminum price of 18,550 RMB/ton at the beginning of the month (July 1).

In the long term, the price was in a sideways range after a decline from a high level, and was fluctuating in the range of 18,200 to 18,500 RMB/ton in July.

Overview of Fundamentals

On the supply side, electrolytic aluminum enterprises in Yunnan Province resumed production capacity of 1.3 million tons. As of July 31, 1.03 million tons had been completed in July. Due to power outsourcing and device maintenance factors, the production capacity in Sichuan Province had been reduced by about 80,000 tons. As of July 31, the production capacity was 41.9 million tons, at a relatively high level.

In terms of social inventory: As of July 27th, the social inventory of domestic electrolytic aluminum ingots was 504,000 tons. The inventory accumulated slightly in the first half of July and began to be withdrawn in the second half. In July, the trend of aluminum ingot factory inventory was synchronized, and the overall inventory accumulated slightly in July, at around 40,000 tons.

Import and export: According to statistics from the General Administration of Customs of China, the import volume of unwrought and rolled non-alloy aluminum in China in June 2023 was nearly 8.94 tons, an increase of 15,400 tons compared to the previous month and 60,900 tons compared to the previous year. From January to June, the total import volume of unalloyed aluminum in China was 485,400 tons, an increase of 288,200 tons year-on-year, or 146.11%.

On the demand side: The operating rate of aluminum profiles was around 60%, the operating rate of aluminum strips and plates was around 70-80%, and the operating rate of aluminum cables was close to 60%.

Market outlook

Aluminum ingot inventory was still at a relatively low historical level. From a cost perspective, in terms of alumina, due to the resumption of electrolytic aluminum production capacity in Yunnan and the reduction of local alumina production capacity caused by mine reclamation in Henan, the short-term volatility of alumina prices was relatively strong, and cost support was slightly strengthened. However, Yunnan's production is expected to release, and at a high production capacity, there is an expectation of an increase in electrolytic aluminum production. In the later stage, it is necessary to focus on whether there are new electricity restriction policies introduced during the peak summer electricity consumption. It is expected that the long short game of aluminum ingots will intensify in August, and aluminum prices may continue to fluctuate horizontally.

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