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Production cuts continue in Europe and the U.S. Aluminum prices may rebound

Production cuts continue in Europe and the U.S. Aluminum prices may rebound

Beijing time on November 18, the domestic futures market Shanghai aluminum futures main contract rose slightly during the day, now at 19200.00 yuan / ton, up 1.72%, the highest intraday touch 19210.00 yuan / ton, the lowest dip to 18880.00 yuan / ton.

In the foreign market, LME aluminum futures on the London Metal Exchange fluctuated narrowly. Specifically, the main LME aluminum is now at $2396.00/mt, up 0.04%, touching an intraday high of $2410.50/mt and a low of $2387.00/mt.

Macro news flash

Russian Aluminium (Rusal) sent a letter to the London Metal Exchange (LME) saying that the LME should disclose all sources of metal inventories on a regular basis and not separately for Russian metals as proposed.

Mysteel: This week, the air diffusion conditions in the northern region have turned significantly worse, with many places concentrating on issuing orange warnings for heavy polluted weather. The impact of this wave of heavy polluted weather on alumina is mainly concentrated in Shandong and Hebei. Through research, taking into account the mandatory emission reduction measures required, Hebei alumina enterprises independently take emergency emission reduction measures, while a number of Shandong alumina enterprises will implement differential production restrictions. Preliminary understanding of Shandong alumina production reduction scale has reached the million ton level, mainly concentrated in Binzhou and Zibo. The next 2-3 days Shandong many places air quality to moderate – heavy pollution, good – light pollution, and 21 by weak cold air, Shandong pollution will ease, this wave of heavy polluted weather warning emergency response to lift, so Shandong alumina production restrictions last for about 4 days.

Institutional view.

Shenwan Futures analysis pointed out that aluminum prices rebounded and surged higher. Macro sentiment has receded, aluminum supply-side disturbances from time to time, demand gradually turned weak. Overseas market LME decided not to impose sanctions on Russian aluminum, supply concerns have eased.

Industry, November 17, the domestic electrolytic aluminum social inventory of 547,000 tons, a small to warehouse 11,000 tons.

Supply side, the domestic Yunnan power tension or continue, Guangxi and other places to resume production and Guizhou, Inner Mongolia new production progress is still less than expected.

Demand side, Henan area aluminum processing enterprises started to improve, aluminum cable and aluminum foil section has grown.

Overall, supply and demand appear weak, it is recommended that light positions to try short.

Macro, market uncertainty about the pace of the Fed rate hike is still high, the dollar or maintain oscillating operation, while the domestic side, economic data for the time being no improvement, but the stimulus policy frequently, the market for macro-expectations have significantly marginal improvement, do more sentiment has risen, but whether it can form a substantial positive remains to be seen.

On the supply side, production cuts in Europe and the United States is still ongoing, but energy pressure has recently eased, the marginal impact is gradually weakening. On the domestic side, the impact of power restrictions in Sichuan has basically receded, production capacity is gradually restored. The Yunnan side of the affected capacity range for the time being no further expansion, pay attention to its follow-up and duration, the near future, Henan, Guizhou and other parts of the aluminum plant or production cuts, the current affected capacity is less, pay attention to the follow-up progress.

Downstream demand, market logistics and transportation gradually improved, but enterprises are still based on the purchase of just demand, the transaction is general. In terms of end consumption, it is still in a weak state, with no substantial improvement for the time being and general demand performance.

In terms of inventory, both domestic and overseas exchange inventories are at historically very low values, and WBMS data lines show an overall supply shortage of aluminum from January to September. In addition, the LME announced the results of the Russian metal, temporarily do not do the ban and threshold settings for Russian metal, but will be published in the future periodic report of the Russian metal percentage.

Overall, the recent marginal improvement in macroscopic aspects of commodity prices form a phase of positive, superimposed on the low inventory or support aluminum prices rebound, but the trend to do more remains to be seen.

Post time: Nov-21-2022