Aluminum prices fell 2.9% in December

Aluminum prices remained weak in December, with a slight downward trend. According to the Commodity Market Analysis System of Shengyi Society, as of December 31, 2024, the average price of aluminum ingots in the East China market in China was 19783.33 yuan/ton, a decrease of 2.90% compared to the market average price of 20373.33 yuan/ton on December 1.

In December, the social inventory of aluminum ingots decreased slightly

In December, the social inventory of domestic aluminum ingots decreased slightly. As of December 30th, the social inventory of electrolytic aluminum in the mainstream domestic market was 473000 tons, compared to 553000 tons on November 31st, and 80000 tons were sold out.

Changes in aluminum ingot production capacity in December

In December, some regions reduced production. Sichuan region reduced production due to entering the dry season, with an expected reduction of around 200000 tons. Some enterprises in Guangxi region reduced production slightly due to cost factors. As of December, the operating capacity of the domestic electrolytic aluminum industry was around 43 million tons, an increase of 3% compared to the same period last year.

Downstream demand is expected to weaken

In January, downstream processing enterprises gradually entered the Spring Festival holiday period, and there is a market expectation that the demand for aluminum ingots will weaken.

Expected increase in raw material alumina

Affected by the Guinea factor, the expected supply of bauxite has led to a rebound in the price of raw material alumina, which has a short-term emotional impact on the price of aluminum ingots.

Aluminum prices in January are difficult to be optimistic about

Despite the short-term rise in alumina prices and strong cost support for aluminum prices, it is difficult to be optimistic about aluminum prices in January due to weak demand in the off-season. They are in a sideways range with weak upward momentum and a bottom downward trend, and are expected to mainly fluctuate weakly.

Aluminum prices remained weak in December. According to the Commodity Market Analysis System of Shengyi Society, as of December 30, 2024, the average price of aluminum ingots in the East China market in China was 19713.33 yuan/ton, a decrease of 3.24% compared to the market average price of 20373.33 yuan/ton on December 1.

Three factors contributing to the weak downward trend of aluminum prices in December:

The weak downward trend in aluminum prices in December was mainly caused by three factors. Firstly, aluminum prices rose in early November, reaching a new high for the year. However, the actual demand from downstream terminals was lower than expected, which led to resistance to high priced raw materials and intensified competition in the upstream and downstream of the industrial chain; Secondly, due to the cancellation of export tax rebates for downstream aluminum products, there is an expectation of weakened export demand in the short term. At the same time, there is a strong expectation of tax increases in the United States, which suppresses prices; The third is the main driving force behind the upward trend of aluminum ingots, and the expectation of sustained cost increases is weakening.

List of Domestic Inventory Data for Aluminum Ingots

In December, the total inventory of domestic aluminum ingots decreased slightly. As of December 30th, the social inventory of electrolytic aluminum in the mainstream domestic market was 473000 tons, compared to 553000 tons on November 31st, and 80000 tons were sold out.

1、 Trend analysis

According to monitoring data from Shengyi Society, copper prices first rose and then fell in December. As of the end of the month, the copper price at the beginning of the month was 74036.67 yuan/ton. At the end of the month, the copper price rose to 74243.33 yuan/ton, with an overall increase of 0.28% and a year-on-year increase of 7.17%.

According to the Business Society’s current chart, copper spot prices in December were mostly higher than futures prices, with the main contract being the expected price two months later.

According to LME inventory, LME copper inventory fluctuated narrowly at high levels in December. As of the end of the month, LME copper inventory was 272725 tons, a decrease of 0.74% from the beginning of the month.

Macroscopically, towards the end of 2024, the US economy has shown some resilience, with a decrease in the number of first-time applicants for unemployment benefits, which has brought a touch of warmth to the market. According to data released by the US Department of Labor on Thursday, the number of people applying for unemployment benefits fell to 219000 in the week ending December 21, lower than market expectations of 225000 and a decrease from the previous week’s 220000. The current unemployment rate of 4.2% appears relatively moderate in the context of the past decade, indicating that the US economy has maintained a relatively stable development trend in the uncertain overall environment.

Supply and demand side: The expectation of tight copper mine supply continues to exist, and the growth rate of refined copper production will slow down. According to data from the National Bureau of Statistics, China’s electrolytic copper production in November was 1.133 million tons, a year-on-year decrease of 1.6%; The cumulative production of electrolytic copper from January to November was 12.451 million tons, a year-on-year increase of 4.6%. In terms of consumption, although December is the traditional off-season, it is expected that this year’s off-season will not be weak, which will have a certain impact on copper prices.

Overall, strong economic data from the United States supports the US dollar, putting pressure on copper prices; The domestic macro situation is improving, and the continuous decline in Shanghai copper inventory provides support for copper prices. In the short term, copper is expected to fluctuate and maintain stability.

According to the analysis of the Business Society’s market monitoring system, on December 26th, the reference price for domestic silicon metal # 441 was 11750 yuan/ton. Compared with December 1st (silicon metal # 441 market price of 12070 yuan/ton), the price decreased by 320 yuan/ton, a decrease of 2.65%.

From the market monitoring system of Shengyi Society, it can be seen that in December, the overall domestic spot market for metal silicon 441 # showed a weak downward trend, and the spot price of metal silicon 441 # continued to approach a low level. As of December 26th, the reference market price for metal silicon 441 # in Tianjin Port area was 11650 yuan/ton, Huangpu Port area was 11650 yuan/ton, Sichuan area was 11400 yuan/ton, Kunming area was 11950 yuan/ton, and Shanghai area was 12100 yuan/ton.

Analysis of Market Factors

In terms of supply: In December, the domestic silicon metal market continued to be in a weak supply-demand state, with some regions continuing to lower their silicon metal operating rates and a small number of manufacturers still having maintenance plans. Therefore, the overall supply of silicon metal market decreased in December.

In terms of demand: At the end of the year, the downstream demand for silicon metal showed weak performance, and the purchasing enthusiasm in the downstream market was not high, resulting in limited new orders in the market.

Market analysis in the future

At present, the overall trading atmosphere in the metal silicon market is light, with only a few large factories receiving relatively large orders recently. The overall market performance is weak. However, although demand is insufficient, some manufacturers have stated that they have fallen close to the cost line, and their willingness to continue to loosen the market is not high. The metal silicon data analyst of Shengyi Society believes that in the short term, the domestic metal silicon market will mainly be weak and operated, and specific changes in supply and demand news need to be closely monitored.

According to the Commodity Market Analysis System of Shengyi Society, the domestic natural rubber spot market has slightly declined recently (12.17-12.24). As of December 24th, the spot rubber market in China is around 16604 yuan/ton, a decrease of 3.93% from 17284 yuan/ton on December 17th. Recently, raw material prices have been weak and declining; Domestic Tianjiao Port inventory continues to increase; Downstream tire factories tend to stock up on demand to support the demand for natural rubber, but they have some resistance to high priced sources, leading to a decline in the natural rubber market at a high level.

December is currently the peak production season in major overseas production areas, and there is an expectation of seasonal increase in raw material output. Recently, with the improvement of weather conditions, rubber cutting work has gradually returned to normal, and raw material prices have fallen from high levels. As of December 24th, the price of Thai glue was 68.00 baht/kg, a significant decrease from 75.00 baht/kg on the 17th; As of December 24th, the purchase price of state-owned and gold rubber water-based concentrated latex raw materials in Hainan production areas was around 17200 yuan/ton, slightly lower than 17400 yuan/ton on the 17th.

Natural rubber inventory continues to show a state of accumulation. As of December 22, 2024, the total inventory of Tianjiao bonded and general trade in Qingdao area was 470000 tons, an increase of 18000 tons compared to the previous period.

Downstream tires mainly provide essential support for the natural rubber market. As of December 20th, the operating load of semi steel tires in domestic tire enterprises is around 7.9%; The construction of all steel tires by tire enterprises in Shandong region has slightly increased to around 6.20% of the load.

Market forecast: The current domestic and international supply of raw materials is gradually increasing, and raw material prices are falling back from high levels; The tire market supports the demand for natural rubber, but is resistant to high priced sources of goods; The inventory of Tianjiao Port continues to increase; Overall, it is expected that the natural rubber market will mainly consolidate weakly in the short term.