Analysis Of The Price Fluctuation Of Aluminum Oxide

Lido:

Domestic bauxite supply is tightening. In May, the import volume of bauxite slightly declined compared with the previous month. Importers generally believe that the price below 75 US dollars per dry ton is underestimated. Therefore, the ore price is relatively firm, and the downward space for the cost of alumina is limited.

This week, the inventory of electrolytic aluminum ingots in major domestic consumption areas stood at 449,000 tons, a decrease of 11,000 tons compared to last Thursday. Compared with the same period last year, it dropped by 307,000 tons, and compared with the same period in 2023, it decreased by 69,000 tons. It remains at a low level in the past five years, and the low inventory still provides support for aluminum prices.

Bearish factors:

Geopolitical risks in the Middle East have escalated again, and market risk aversion has intensified. Last week, the Federal Reserve decided to keep interest rates unchanged, while lowering its GDP growth expectations for this year and next, and raising its inflation and unemployment rate expectations. The overall macro sentiment is bearish.

Last week, the operating capacity of alumina continued to rise to 93.05 million tons, and the operating capacity of electrolytic aluminum was 44.149 million tons. The balance coefficient between the two was 2.11, indicating a phase of surplus. The spot price of alumina declined slightly, and the price of thermal coal dropped, with the national average cost falling back below 17,000 yuan per ton.

3. This week, the operating rate of leading enterprises rose by 0.6 percentage points to 59.8%. Among them, the operating rates of aluminum alloy wheels and cables remained stable. Due to the high aluminum price and increased inventory, the operating rate of aluminum plates and strips declined. The new orders of building profiles were weak, causing the operating rate of small and medium-sized enterprises in photovoltaic frames to drop. In the industrial profiles sector, large orders from the automotive and rail transit sectors supported production. The operating rate of aluminum foil slightly decreased. Due to insufficient orders in the off-season and losses, the operating rate of recycled aluminum enterprises was forced to decline. It is expected that the weekly operating rate of downstream aluminum processing will continue to decline slightly next week.

Summary: Geopolitical risks overseas have risen, the Federal Reserve has maintained interest rates unchanged while lowering its economic growth forecast, and the overall macro sentiment is bearish. Moving forward, attention should be paid to the developments in the Middle East and whether the Fed will cut interest rates earlier. The supply of spot alumina continues to improve, and the Back structure in the market is expected to weaken. The cost of electrolytic aluminum continues to decline, supply remains relatively stable, but the output of ingots has decreased. The key focus in the future will still be whether consumption will weaken significantly. Currently, domestic consumption is relatively stable, while overseas mainly faces the issue of steel and aluminum tariffs being raised to 50% and tariffs on steel household appliances being increased. There is a risk of further decline in exports in July. In the short term, aluminum prices are expected to fluctuate widely.

 

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