Aluminum price stops falling and stabilizes
According to data from Business News Agency, on March 27, 2023, the average price of domestic aluminum ingots in the East China market was 18416.67 yuan/ton, with a daily increase of 0.44%. Compared to the beginning of the month (March 1), the aluminum price was 18416.67 yuan/ton, which was flat. After recovering in January, aluminum prices fell in mid February. After the Federal Reserve raised interest rates in March, aluminum prices stopped falling and stabilized.
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In the long term, the current price has retreated significantly, increasing by 5.54% compared to the recent recovery starting point (July 14, 2022), where the average market price of aluminum ingots was 17450 yuan/ton. The recent high aluminum price occurred on December 5th, with the average aluminum ingot market price of 19536.67 yuan/ton, a decrease of 5.73%.
Overview of fundamentals
1. High inventory levels showed month-on-month inventory removal performance
As of March 23, the domestic mainstream social inventory was 1.218 million tons, compared to 1.076 million tons of social inventory at the beginning of February (February 2), with a cumulative inventory of 142000 tons; Compared to the social inventory of 1427000 tons at the beginning of March (March 2), 209000 tons were removed from the warehouse.
2. Gradual digestion of macro pressure
With the relative decline of macro panic sentiment and the implementation of the Federal Reserve’s interest rate hike in March, macro negative factors in the early stage gradually digested.
3. List of import and export data
According to customs data, in January-February, China imported about 150000 tons of aluminum ingots, an increase of 92800 tons year-on-year. The total export of aluminum ingots was about 3700 tons, a year-on-year decrease of 27000.
4. Domestic supply side
Guangxi and Sichuan regions have a small amount of electrolytic aluminum production capacity, while Gansu, Guizhou, and Inner Mongolia have a small amount of new production capacity.
After three rounds of production restriction, the production capacity in Guizhou has decreased by 760000 tons compared to the end of November. A new round of production reduction in Yunnan has been in place, with a total reduction of about 780000 tons of production capacity until the end of the dry season in May.
Aftermarket forecast
From the perspective of supply side, recent production reductions in Yunnan-Guizhou region and inventory data show that the social inventory of electrolytic aluminum is still relatively high, but there is a trend of destocking. In the short term, electrolytic aluminum will be suppressed and alleviated by macro factors. It is expected that the aluminum price will stop falling and stabilize, and the future market will be dominated by strong shocks. In the near future, it is expected to wait and see the strength of downstream consumption.
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