Indonesia announced it will stop exporting bauxite and stop exporting tin at the end of the year to support downstream construction in the mining industry. According to SMM, China imported 6.768 million tonnes of bauxite from Indonesia from January to March 2022. Among them, Indonesia’s imports in a single month in March accounted for 21.2% of the total, and the top two importers located in Guinea accounted for 52.8% and Australia accounted for 25.2%. And previously, the president of Indonesia has repeatedly reiterated the ban on bauxite, the current local mines have basically no spare capacity. China’s alumina plant has been actively looking for alternative ore from last year, but the supply is still facing certain uncertainty, is expected to enhance the cost side of the electrolytic aluminum support, also reflects the aluminum price to supply disturbance still has a certain degree of flexibility.
WBMS data March 2022 global primary aluminium production was 5,697,500 tonnes and demand was 5,542,500 tonnes. China’s production is estimated at 9.633 million tonnes and currently accounts for approximately 58% of total world production. global primary aluminium demand in January-March was 16.23 million tonnes, a decrease of 727,000 tonnes compared to the same period in 2021. global primary aluminium production in January-March was down 0.4% year-on-year. global primary aluminium was oversupplied by 474,000 tonnes in January-March. Therefore, the global primary aluminium market was oversupplied by 474,000 tonnes in January-March and will be in short supply by 1.676 million tonnes for the whole of 2021.
LME stocks continued their downward trend since the beginning of 2021 to 511,000 tonnes, with cancelled warehouse receipts increasing by 0.45 million tonnes to 317,500 tonnes and available stocks at a record below 200,000 tonnes. The spot discount to the March contract narrowed to US$18 per tonne. In addition, April US aluminium production as well as shipments have seen a significant decline from March on a year-over-year basis. In particular, new orders for aluminium sheet and foil in April 2022 fell by 4% compared to April 2021 and by almost 11% compared to March 2022. Reflecting high inflation gradually reflected the suppression of demand.
On the domestic front, social stocks of electrolytic aluminium fell by 38,000 tonnes to 965,000 tonnes on Thursday, with a total decline of 22,000 tonnes since May, with Wuxi down 28,000 tonnes and Gongyi down 20,000 tonnes, and a small accumulation of stocks in Nanhai. This is also in line with the feedback from the spot market, where trading enthusiasm has gradually and cautiously picked up, maintaining the view that consumption is gradually improving.
Summary: macro side, overseas overseas liquidity contraction, domestic epidemic gradually easing will bring consumption back to fill, but the timing still has a large uncertainty. Aluminum market fundamentals, supply concerns difficult to solve under the overseas inventory steadily declining trend has not changed, but weak macro expectations began to gradually to strong supply and demand reality conduction, the domestic side of the spot slowly improve, ushering in the phase of rebound, but the economic downward pressure will still limit the height of the rebound.
Post time: May-20-2022