Aluminum prices in November will experience a “V” decline
Aluminum prices remained strong in early November, showing a strong performance. Recently, aluminum prices have fallen, and aluminum prices have been fluctuating in November. According to the Commodity Market Analysis System of Shengyi Society, as of November 29, 2024, the average price of aluminum ingots in the East China market in China was 20373.33 yuan/ton, a decrease of 6.20% from the market average price of 21720 yuan/ton on November 8.
In mid to late November, aluminum prices showed a weak downward trend for the following reasons:
1. Downstream is weak in accepting high priced aluminum ingots
After the previous cost push, aluminum prices are currently at a relatively high level for the year. In the overall environment where domestic real estate terminal demand is not optimistic, the downstream has limited tolerance for high prices.
2. There is an expectation of weakening export demand
On November 15, 2024, the Ministry of Finance and the State Administration of Taxation issued a notice on adjusting the export tax rebate policy. Starting from December 1, 2024, all export tax rebates for aluminum products will be cancelled, involving 24 tax codes such as aluminum strips, aluminum foils, aluminum tubes, aluminum tube accessories, and some aluminum bar profiles.
The partial 301 tariff policy of the United States came into effect on September 27th. This includes a 100% tariff on Chinese electric vehicles, a 50% tariff on Chinese solar cells, and a 25% tariff on Chinese steel, aluminum, electric vehicle batteries, and key minerals.
The cancellation of export tax rebates for downstream aluminum products in China and the implementation of some 301 tariff policies in the United States. Prior to this, under the guidance of the new US president and tax increase policies, the overseas landing costs of exported products have been raised from a domestic perspective. The export demand of the aluminum industry chain is expected to weaken.
3. Doubts about the sustainability of cost support
Although the short-term cost support for aluminum ingots remains strong, the sustainability of cost support is questionable. The fundamentals of proximal alumina remain favorable, but it has also been reflected in prices, with even alumina prices exceeding expectations and experiencing excessive increases. Currently, the profit window for alumina exports is gradually closing, and due to high prices, there will be more production capacity in the future, and long-term excess pressure will gradually emerge; The risk of alumina price pullback has increased, and the cost support risk of aluminum ingot prices has intensified.
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