Rising aluminum production in Yunnan, China has undoubtedly added new pressure to global aluminum supply. However, concurrently, the resilience of low aluminum ingot stocks and consumption is providing robust support to aluminum prices. Especially in China, the flourishing real estate market, rapid growth of the new energy vehicle industry, and outstanding performance of photovoltaic installations are all contributing significantly to aluminum consumption.
In recent years, the Chinese government has actively worked to reduce housing inventory by introducing a series of policies aimed at stimulating demand in the real estate market. These policies have visibly boosted the prosperity of the real estate sector, consequently driving growth in aluminum consumption. Furthermore, the Chinese government has implemented a series of policies to encourage the development of the new energy vehicle industry, which has also greatly fueled the increase in aluminum consumption.
Additionally, the development of the photovoltaic industry has presented a new avenue for aluminum consumption growth. With global attention increasingly focused on renewable energy sources, the photovoltaic sector is undergoing unprecedented rapid expansion. China, in particular, has shown remarkable progress in photovoltaic installations, which undoubtedly contributes to higher aluminum consumption.
In recent times, there has been a slight improvement in the spot market, with end-users needing to replenish their inventories by the end of the month. Simultaneously, the trend of inventory reduction continues, which to a certain extent supports the upward price movement. Therefore, it is expected that aluminum prices will remain in a moderately strong and fluctuating position in the short term, with a possibility of a slight increase in today’s spot aluminum prices.
Overall, despite the increased aluminum production in Yunnan causing supply pressure, the resilience of low aluminum ingot stocks and consumption is providing a stabilizing influence on aluminum prices. In the short term, aluminum prices are projected to maintain a fluctuating yet relatively strong trajectory. However, investors should closely monitor market dynamics to promptly address potential risks and challenges that might arise.
Post time: Aug-29-2023