Core view -
Last week, aluminum prices rose and then fell, running range in 18065-19435 yuan / ton, up 0.16%.
Last Monday the United States Hawesville aluminum plant (250,000 tons) began to stop production, last Friday Alcoa Warrick aluminum plant a production line out of service (54,000 tons), European energy prices rose more than 50% compared to the beginning of June, overseas supply is still facing the risk of production cuts or even interruptions; 11% of domestic electrolytic aluminum production capacity has been a theoretical loss, concern about the effectiveness of the cost support position.
Domestic inventories fell by 17,000 tons to 751,000 tons last week, with the decline slowing down significantly. The demand side of domestic real estate and infrastructure activities of the ring recovery is driving the aluminum terminal demand rebound, the easing of anti-epidemic policy and the introduction of stable growth policy is conducive to the recovery of metal consumption, but the construction profile order performance is still deviated, while the off-season effect of the recovery of the consumer side is also tested, the spot discount continues to expand.
Unilateral: macro environment bearish, short-term overseas production cuts and domestic demand recovery has support, medium-term supply and demand gap narrowing or will drive the aluminum price center of gravity back to the cost line.
Arbitrage: overseas energy risk provides potential drive, domestic production gradually increase, Q3 may begin to accumulate storage, tight outside and loose inside pattern or will continue, continue to focus on inside and outside positive set.
This week’s concern
1. concern about the improvement of domestic demand, the pace of domestic electrolytic aluminum production capacity release.
2. overseas aluminum plants to reduce shutdown and resume production.
3. continue to focus on the situation in Russia and Ukraine, European energy issues.
According to Mysteel data, the social inventory of electrolytic aluminum dropped 15,000 tons to 751,000 tons last week, and the decline in inventory slowed down significantly.
LME aluminum inventory fell by 19,100 tons to 369,700 tons, continuing to set a new record low, and the proportion of written-off warehouse receipts was 57.21%.
Electrolytic aluminum cost: focus on cost support
As of last Friday, China’s electrolytic aluminum full cost average of 17,494 yuan / ton, down 106 yuan / ton, the average profit for the profit of 1566 yuan / ton, the average profit level down driven by the decline in the price of term aluminum.
Valuation level: aluminum prices are located in the low side of the oscillation range
As of last Friday, aluminum valuation water level of 27.78%, located in the low position of 20%-80% oscillation range, compared with the previous week moved up 4 percentage points.
Electrolytic aluminum: domestic attention to cost support, overseas supply disruption risk still exists
According to Antaike, China’s electrolytic aluminum production in June about 3.365 million tons, of which the loss production accounted for 10.5%, 6.1 percentage points higher than last month. Aluminum price of 19,000 above the overall industry still has room for profit, after the market if continued to break nine runs, the industry loss surface will continue to expand, and the cost of support will gradually appear.
Europe is worried about Russia cut off the supply of natural gas, German power futures prices rose again this week to more than 300 euros / MWh, as of the end of June, European natural gas and electricity prices are more than 50% higher than the beginning of the month, the summer electricity prices do not fall but rise to the winter and the risk of increased energy shortages. Last Monday the United States Hawesville aluminum plant (250,000 tons) began to shut down, last Friday Alcoa Warrick aluminum plant a production line shutdown (54,000 tons), Australia is also facing the problem of power tension, there is still a potential risk of supply disruption overseas.
Aluminum downstream: the consumption side is still less than expected although it is continuing to repair
According to Mysteel, last week, aluminum bar social inventory fell 0.65 million tons to 120,600 tons, factory inventory fell 0.1 million tons to 45,400 tons.
According to Mysteel research, aluminum prices fell sharply, Shandong area aluminum profile enterprises new orders are still on the low side, June and August construction profile orders are generally reduced, mainly by the impact of the real estate downturn, industrial profile orders are mostly, mainly for solar frame profiles. Profile factories are not in a hurry to place orders when there is a shortage of raw materials, most of them are keeping a wait-and-see approach, and raw material stocks are kept at 10-15 days of production materials.
Post time: Jul-05-2022