Aluminum prices exceeded 19000 yuan/ton in September

According to the Commodity Market Analysis System of Business Society, on September 5, 2023, the average price of domestic aluminum ingots in the East China market was 19253.33 yuan/ton, a decrease of 0.88% compared to the previous trading day, and a decrease of 1.82% compared to the aluminum price of 19610 yuan/ton at the beginning of the month (September 1).

In the long term, the current price is in a sideways range after a high decline. Since May, the price has been fluctuating below 19000 yuan/ton, breaking through 19000 yuan/ton at the end of August.

Overview of Fundamentals

Enhanced raw material benefits:

The continuous production restrictions in the Sanmenxia area of Henan Province, coupled with the planned restart of an aluminum oxide enterprise in Inner Mongolia, involve a production capacity of approximately 500000 tons. The routine equipment maintenance work of some aluminum oxide enterprises in Shandong and southwestern regions, as well as the increase in overseas bauxite prices, have jointly exacerbated the problem of tight supply of bauxite. The cost of aluminum oxide has increased, and the price of aluminum oxide has been firm.

2. Steam coal is affected by news and has positive support in the short term.

Increased pressure on the supply side

Supply side: With the resumption of production by electrolytic aluminum enterprises in the southwest region, the current production capacity is at a relatively high level. At present, the resumption of production in Yunnan region has come to an end. Although the current production capacity is relatively high, the proportion of aluminum water is still high, and the supply of aluminum ingots is still tight. The production of electrolytic aluminum in July was 3.481 million tons, a year-on-year increase of 1.5%; The cumulative production from January to July was 23.618 million tons, a year-on-year increase of 2.8%. In August, with the release of production capacity in the Yunnan region, there are still expectations of production capacity growth.

Low inventory

In terms of social inventory, following the start of destocking in the second half of July, inventory is relatively low. As of September 4th, the mainstream areas of domestic electrolytic aluminum ingots have a social inventory of 477000 tons, with a cumulative inventory of 20000 tons compared to August 29th. However, compared to July 31st, the inventory was 506000 tons and 29000 tons were removed. Based on year-on-year data, it is still at a low level in the same period of the past five years.

Future market forecast

Macroscopically positive, with strong supply and demand. Currently, electrolytic aluminum production capacity is operating at a high level, but the high aluminum water ratio has led to a low mainstream inventory of aluminum ingots in society. Aluminum has exceeded 19000 yuan/ton, mainly supported by low inventory and strong demand expectations, coupled with rising costs. However, recently, aluminum ingots have started to accumulate on a month to month basis, and it is expected that aluminum prices will fluctuate around the 19000 yuan/ton line in the short term.

According to the monitoring of the Commodity Market Analysis System of the Business Society, the 1 # tin ingot market in the East China region fell first and then rose this week (August 28th -9.4). On August 28th, the average market price was 216460 yuan/ton, and on September 4th, the average market price was 217310 yuan/ton, with a weekly increase of 0.39%.

The K-bar chart of commodity prices uses the concept of a price trend K-line to reflect weekly or monthly price fluctuations in the form of a bar chart. Investors can buy and sell investments based on the changes in the K-bar chart. Red indicates an increase; Green indicates a decline; The height of the K-bar represents the range of fluctuations. From the monthly K-bar chart, it can be seen that after November 2022, tin prices have risen continuously for three months due to macroeconomic factors. Since February 2023, the price has dropped by 11.35% per month, and the trend of tin prices has fluctuated narrowly in the past three months. From the weekly K-bar chart, it can be seen that the tin ingot market has been rising for nine consecutive weeks, with a slightly volatile operation in late July.

In terms of the futures market, the recent macro trend has been good, with the overall domestic and international environment warming, inflation in the United States falling, expectations for interest rate hikes lowered, and the external market showing a good trend. The domestic side continues to release heavyweight positive news, with economic expectations improving and overall macroeconomic performance improving, driving the metal market up. The metal market has generally risen this week, while tin prices have only slightly increased due to the drag of fundamentals.

The weak supply and demand situation has dragged down the upward trend of tin prices. There have been many news on the supply side in the Wa region recently, but domestic market insiders generally believe that the real impact of Myanmar’s mining ban on the market may be after September. Fundamentally speaking, the recent rebound in domestic refinery operations has led to a buildup of inventory in the domestic society. In terms of demand, downstream buyers still purchase according to demand, buying at low prices, and demand tends to be rigid. Overall, the supply and demand in the tin market are still weak, and the market sentiment is on the wait-and-see side. It is expected that the market will continue to maintain a weak and volatile trend in the future without the influence of external news. The recent market fluctuations will mainly follow macro factors, and the latest developments in Myanmar’s mining ban news will continue to be monitored in the future.

On September 3rd, the base metal index stood at 1231 points, unchanged from yesterday, a decrease of 23.82% from the cycle’s highest point of 1616 points (2022-03-09), and an increase of 91.74% from the lowest point of 642 points on November 24th, 2015. (Note: The cycle refers to the period from December 1st, 2011 to the present).

According to the price monitoring of the Business Society, there were 14 commodities in the non-ferrous sector on the list of commodity prices rising and falling in the 35th week of 2023 (8.28-9.1), with aluminum (3.65%), dysprosium metal (2.94%), and lead (2.32%) ranking among the top three commodities. There are two products that have decreased compared to the previous month, with nickel (-1.68%) and cobalt (-1.65%) being the top two products in terms of decline. This week’s average increase or decrease was 0.68%.

Price trend

The recent trend of the domestic PA66 market tends to be sideways. According to data monitoring from Business Society, the mixed benchmark price of PA66 in China was 18433.33 yuan/ton on August 31st, with a+1.28% increase or decrease compared to the price level at the beginning of the month.

Cause analysis

The market volatility of PA66 in August was relatively strong, and overall, spot prices of various brands showed a narrow increase. In terms of supply, the overall load of the domestic PA66 industry remained around 65% during the month, and it is currently operating horizontally compared to the previous period. The changes in the production line of the enterprise are limited, and the on-site supply of goods is still relatively sufficient. The acceptance of low-priced spot goods by the supply side has rebounded, but due to the fact that terminal enterprises still focus on maintaining production, the inventory digestion speed is average. The enthusiasm for stocking on site is not high, and the demand side has a moderate level of support for spot goods. At the same time, supplier pricing operations are often cautious. On the upstream side, the domestic market for hexamethylene diamine is relatively weak. In terms of adipic acid market, the trend was sideways after rising, with raw materials such as pure benzene and cyclohexanone showing a strong trend. The promotion of PA66 spot prices on the cost side is relatively strong. Affected by a slight improvement in costs and demand, PA66 continued to strengthen its consolidation and operation in August.

Future Market Forecast

The spot price of PA66 fluctuated strongly in August. The overall price trend of raw materials is relatively strong, and the support for the cost side of PA66 is still acceptable. The load of PA66 enterprise is almost horizontal, and there is no significant improvement in supply support. The demand side takes goods to maintain production, and it is expected that PA66 may maintain horizontal consolidation in the short term.

Zinc price “V” type operation in August

According to the Commodity Market Analysis System of the Business Society, as of August 31, the zinc price was 21208 yuan/ton, a slight increase of 0.25% compared to the zinc price of 21156 yuan/ton on August 1; The zinc price has increased by 6.33% compared to 19946 yuan/ton on August 17th. The macroeconomic performance in July was poor, with zinc prices dropping significantly in early August; The traditional consumption peak season of “nine gold and ten silver” is approaching, and terminal demand is expected to improve; Supported by macro bullish conditions and tight supply, zinc prices fell first and then rose in August. As the fundamentals of the zinc market improved, the focus of zinc prices shifted upwards.

Zinc prices in the LME market fell first and then rose in August

From the trend chart of zinc prices in the LME market, it can be seen that in August, zinc prices in the LME market first fell and then rose. Data released in early August showed that employment growth in the United States further slowed down in July, macroeconomic growth slowed down, and zinc prices fell significantly; In mid August, data showed a decrease in unemployment in the United States, and the resilience of the labor market supported the economy by driving retail sales and housing construction. Zinc prices stopped falling and rose in mid August. At the end of August, data showed that the number of new jobs created by American companies in August hit a new low in five months, further indicating signs of slowing labor demand. In addition, the PMI data for August in the United States showed poor performance, and the unexpected decline in the service industry had a huge impact on the economy. The manufacturing PMI decreased from 49.0 in July to 47.0, marking the fourth consecutive month of contraction and the economy approaching stagnation. Zinc prices may fluctuate and consolidate in the future.

China Manufacturing Purchasing Managers Index

According to data released by the National Bureau of Statistics, in August, the Purchasing Managers’ Index (PMI) of the manufacturing industry was 49.7%, an increase of 0.4 percentage points from the previous month, further improving the level of manufacturing prosperity. Production demand has rebounded synchronously, and the willingness of enterprises to purchase has increased. The non-ferrous metal market is positive, and zinc prices have stopped falling and rising.

Overview of zinc market situation

In terms of policies, the three departments have issued documents stating that they will reasonably increase consumer credit support for products such as automobiles, home appliances, and home furnishings, continuously optimize interest rates and fee levels, stimulate domestic consumption, and benefit the zinc market. On the supply side, with the increase in zinc concentrate processing costs and the stimulation of smelting profits, some smelters have completed or postponed maintenance. In early August, domestic zinc production was slightly higher than expected compared to the previous month. With the decline in zinc prices, zinc concentrate processing costs have stabilized, and domestic smelters have concentrated maintenance, resulting in a decline in zinc market output. In late August, markets such as Shanghai and Tianjin experienced significant shortages, and the rise in zinc prices has been positive. In terms of demand, downstream demand is basically maintained, but due to the tightening of spot supply, downstream willingness to “buy up” has increased. In addition, the continuous promotion of some consumer promotion measures has driven social inventory to go out of stock. Support for the rise of zinc prices in the future remains

Future Market Forecast

Data analysts from Business Society believe that the macroeconomic performance did not meet expectations, and zinc prices fell in August. However, with more positive news, zinc prices stopped falling and rose. In the future, with the arrival of the traditional peak season of “nine gold and ten silver”, the demand for zinc is expected to improve. However, national policies stimulate economic recovery, accumulate social inventory in the zinc market, and overall zinc supply weakens, demand recovers, and positive news increases. However, the performance of the US economic data is less than expected, which to some extent limits the room for zinc prices to rise. It is expected that zinc prices will fluctuate and consolidate at high levels in the future

Price trend

According to the Commodity Market Analysis System of the Business Society, the price trend of cryolite in Henan region continues to be stable. On August 30th, the average market price in Henan region was 7850 yuan/ton, which is the same as the average price of 7850 yuan/ton on August 21st, with a year-on-year increase of 2.28%.

quotations analysis

In late August, the price trend of cryolite remained stable, and the manufacturer’s quotation remained unchanged. The upstream price of cryolite has risen, leading to an increase in production costs and a firm quotation from enterprises. However, downstream companies are more resistant to high priced cryolite and have less enthusiasm for purchasing in the market. Although cryolite manufacturers maintain rational inventory, their quotations are difficult to rise. Manufacturers negotiate shipment, and the market mentality is to wait and see. As of August 30th, the factory quotation for cryolite in Shandong region is 7000-8600 yuan/ton; The factory quotation for cryolite in Henan region is between 7200-8900 yuan/ton.

The upstream fluorite market has risen, with an average market price of 3168.75 yuan/ton as of August 30, an increase of 1.60% compared to the price of 3118.75 yuan/ton as of August 21. Due to increasingly strict safety and environmental requirements faced by mining enterprises, the operating rate of the domestic fluorite industry remains low, while difficulties in starting raw ore production and restrictions on raw materials have led to tight inventory of fluorite enterprises, tight market spot supply, and an upward trend in fluorite prices.

The downstream aluminum market continued to fluctuate and rise. On August 30th, the aluminum price was around 19043.33 yuan/ton, an increase of 2.29% compared to the price of 18616.67 yuan/ton on August 21st. On the 23rd, the coal mine was affected by a dangerous accident, leading to a rise in coal prices, which has brought expectations of a certain cost increase to the electricity consuming and aluminum industries. At the same time, downstream demand has slightly rebounded, bringing good news to the market, and the aluminum price trend is relatively strong.

Future Market Forecast

Cryolite enterprises maintain rational inventory, manufacturers actively ship, downstream demand is average, market trading atmosphere is weak, raw material construction continues to be low, prices rise strongly, and support for cryolite is good. At the same time, the downstream aluminum market is also operating strongly, and with cost support, it is expected that the cryolite market may consolidate and rise in the future. Specific attention should be paid to changes in manufacturer inventory and downstream acceptance.