Core Logic Review
The core logic of the first quarter of 2022 lies in the mismatch between supply and demand. Supply side has been affected by the event of production cuts, from January began to speculate alumina super large-scale production cuts and the probability of production cuts in Inner Mongolia by the impact of the Winter Olympics, February Guangxi epidemic led to a hundred mine production cuts, triggering market concerns about Guangxi Baise area more than 2 million tons of production cuts to expand the scale, late February to March and began trading Russian aluminum by the impact of sanctions to reduce production and the probability of high energy costs in the European region to stimulate production cuts;. Demand side in January domestic demand performance positive, aluminum ingot late accumulation, East China is very good performance, mainly to make up for the early orders and early production to prevent the Winter Olympics production restrictions, but after the Spring Festival demand performance has lackluster, only in early March after the price plunge downstream centralized replenishment stimulation, most of the time performance is relatively weak, resulting in a quarter of external strong internal weakness, overseas cost support aluminum prices to maintain a high level During the first quarter, the price of aluminum remained high due to the influence of the LME trading factors.
Market Outlook
In the second quarter, more factors affecting the market, from a number of “sub-force” of the “contest” to see the late “combined forces” to which direction the flow:.
First, the domestic supply and demand perspective downward price pull. From the perspective of domestic fundamentals, the supply side is gradually released, while the total demand for the current few signs of growth, mainly by the real estate drag. As of the end of March, the operating capacity of electrolytic aluminum has reached 39.7 million tons, is expected to reach 40.6 million tons at the end of April, but because the production is not released in the early stage of production, so the current operating capacity is equivalent to about 38.8 million tons at the end of February, so the real production release at the end of April early May, and due to the northwest transportation of coal to occupy capacity and the epidemic in Shandong led to blocked shipments, a large number of Aluminum ingot and aluminum bar backlog, the epidemic is expected to ease around mid-April, then the late release of production overlapped with the arrival of backlogged goods, the impact of supply is still strong; while the demand side is currently inhibited by the epidemic and high prices, general performance, in the case of reduced upstream shipments, production areas under pressure, consumer inventories flattened, indicating that demand is weakening significantly, after the previous high price suppression of demand along with a significant price recovery stimulate replenishment, but if prices continue to maintain high levels, and so on after the supply up, price pressure will be more serious.
Secondly, the core logic of the cost side lies in the coal energy field, alumina upside space is limited, coal is currently in the country under the role of strong supply stability, there are signs of fall, but the current electrolytic aluminum profits are high, temporarily not yet play a supporting role, but the late aluminum prices fell below 18,000 yuan / ton will gradually play a supporting role;.
Finally, from the overseas point of view, the current global electrolytic aluminum apparent inventory is still low, overseas energy high price is one of the support factors of the current strong aluminum prices, especially the Russian-Ukrainian conflict is still continuing, overseas costs remain high, not to mention the energy itself is very tight, from March onwards in the domestic and foreign larger price difference will lead to a large increase in exports of aluminum sheet and strip, aluminum products, etc., superimposed on the current more than 3 months Sea transport cycle, is expected to 2 quarter overseas will maintain a strong situation, but there is still greater uncertainty, overseas play a supporting role, concerned about the probability of Russia-Ukraine events to ease and China’s exports to a certain level of volume to make up for the gap overseas, in fact, the current Russian aluminum no production cuts in the general context, the global flow of goods reconfiguration will prompt the return of aluminum prices;.
In summary, it is expected that the first quarter of 2 global aluminum prices will probably maintain a high oscillation situation, the inflection point of the fundamental data is expected to occur in May or so, the second half of the price began to decline, but the market will play in advance of expectations, if prices maintain the current strong situation, then previously suppressed demand may be difficult to repair in the short term, then after the supply up, the price will fall back to the space will be larger and more rapid, so the second quarter is expected to price before the high after the low, the internal and external plate of the anti-suit also accompanied by a large number of Chinese exports and ease.
Post time: Apr-01-2022