Foreign media on April 12; Shanghai aluminum prices slid for a sixth straight session on Tuesday, falling to more than three-month lows as new crown prevention measures in top consumer China, and bets on aggressive policy tightening, sparked investor concerns about economic growth and demand.
The main May aluminum futures contract on the Shanghai Futures Exchange ended the day down 1.2 percent at 21,070 yuan ($3,309.25) a tonne, having fallen earlier in the session to a low of 20,605 yuan since Jan. 6.
Three-month aluminum futures on the London Metal Exchange (LME) were up 1 percent at $3,280 a tonne by 0707 GMT, having fallen to a low since March 15 on Monday.
“The jitters triggered by the Shanghai sequester are continuing to weigh on the popularity of aluminum and other demand-sensitive commodities,” said Thomas Westwater, an analyst at DailyFX.
Meanwhile, the dollar index rose above 100 early Tuesday.
“The climb in the dollar reflects rising bets related to the U.S. Federal Reserve (Fed/FED) raising interest rates to fight inflation. That is stoking doubts of a recession, which is more directly detrimental to metals prices relative to the dollar itself,” Westwater said.
In other metals, Shanghai nickel rose 0.1 percent; Shanghai zinc rose 1.8 percent; Shanghai tin rose 0.3 percent; and Shanghai lead fell 0.6 percent.
LME copper futures rose 0.2% to $10,220 per tonne, zinc futures rose 0.7% to $4,319 per tonne, lead futures rose 0.3% to $2,389 and tin futures were steady at $43,400.
Negative feedback effects from upward inflation continue
The U.S. CPI continued to rise in February, up 7.9% year-on-year, the largest year-on-year increase since January 1982, the U.S. inflationary pressure is still no sign of easing. February prices rose sharply mainly by energy, housing and food prices and other factors, and the Russian and Ukrainian conflict triggered a surge in global oil prices and other commodity prices, also contributed to the U.S. inflationary pressure. In the face of continued high inflation, the Federal Reserve will take a more hawkish monetary policy. The latest minutes show that in the next regular meeting there may be several 50 basis point rate hikes, and may start as early as May to reduce the balance sheet by up to $95 billion per month. As a result of this, the dollar index has recently continued to move higher, and once broke through the round number mark of 100, the continued high dollar index or commodity prices caused some pressure.
In addition, the continued upward inflationary pressure also forced Europe and the United States to take more ways to suppress energy prices. Recently, the International Energy Agency (IEA) plans to release 120 million barrels of oil reserves jointly with member countries to ease the spike in oil prices caused by the conflict between Russia and Ukraine. Among them, the United States will release 60 million barrels of them, and another 60 million barrels will be released by other member countries. Crude oil prices have fallen back significantly after the news was announced.
Domestic supply pressure began to highlight
In the first quarter, electrolytic aluminum production profits are at a high level, and in the context of no policy constraints, aluminum plants are more actively put into production. Data show that in March 2022 (31 days) China’s electrolytic aluminum production 3.315 million tons, a decrease of 0.92% year-on-year, the average daily production of 106,900 tons, an increase of 0.17 million tons, a decrease of 0.1 million tons; 2022 January-March domestic production of a total of 9.465 million tons of electrolytic aluminum, a cumulative decrease of 2.28% year-on-year. The main reason for the decrease is that in the first quarter, Guangxi area was affected by the epidemic, a certain number of production cuts occurred. March began to domestic electrolytic aluminum production and new production capacity to put into production significantly accelerated, including Yunnan and Guangxi and other places to add and resume production capacity totaling 998,000 tons, March domestic electrolytic aluminum enterprises did not appear to reduce production. As of early April, the statistics of the national electrolytic aluminum running capacity of 3,974,000 tons, the domestic effective built capacity scale of 44,047,000 tons, the national electrolytic aluminum start-up rate of about 90.8%.
Cost still has downward space
A quarter of the U.S.-Russia conflict led to tight supply of overseas alumina, overseas alumina prices continue to rise to open the domestic export window. At present, overseas alumina prices have retreated significantly, alumina few export profits, export sustainability is in doubt. At the same time 2 quarter domestic alumina put into production more, including Tian Yuan chemical capacity expansion (400,000 tons / year), Chongqing Bosai Wanzhou project (1.8 million tons / year), Hebei Wenfeng new (1.2 million tons / year), Jingxi Tiangui second phase (800,000 tons / year), the new production capacity are in the trial run, is expected to be released in April the possibility of greater. If the actual landing capacity in the 2nd quarter is more, the export volume continues to decline, the domestic alumina is facing oversupply problems, the price has the possibility of pullback.
Also in late February the National Development and Reform Commission on further improving the coal market price formation mechanism notice mentioned that when coal prices rise significantly or are likely to rise significantly, to guide coal prices back to a reasonable range; when coal prices have fallen excessively, comprehensive and appropriate measures to guide coal prices back to a reasonable level. And announced the key areas of coal out of the mine link in the medium and long-term trading price reasonable range, including Shanxi region calorific value of 5500 kcal coal price reasonable range of 370-570 yuan / ton, Shaanxi 320-520 yuan / ton, Mengxi 260-460 yuan / ton, the recent stage of Qinhuangdao port The medium and long term trading price of downstream coal (5500 kcal) is more reasonable at 570~770 yuan per ton (including tax). The current Qinhuangdao power coal price of 940 yuan per ton is higher than the reasonable range, and after May 1, the power coal spot price may have some space for downward fluctuation.
Post time: Apr-13-2022