Aluminum prices first fell and then rose in mid to early September
Aluminum prices first fell and then rose in mid to early September. According to the Commodity Market Analysis System of Shengyi Society, as of September 20, 2024, the average price of aluminum ingots in the East China market in China was 19980 yuan/ton, an increase of 1.71% from the market average price of 19643.33 yuan/ton at the beginning of the month (September 1).
On September 20, 2024, the spot price of aluminum ingots (AL99.70) for China Aluminum Corporation Limited is as follows: the external quotation for the East China market is 19960 yuan/ton, the external quotation for the South China market is 19820 yuan/ton, the external quotation for the Southwest market is 19850 yuan/ton, and the external quotation for the Central Plains market is 19850 yuan/ton.
Changes in import and export tariffs
On September 13th, the Office of the United States Trade Representative stated that some of the 301 tariff policies will take effect on September 27th. This includes a 100% tariff on Chinese electric vehicles, a 50% tariff on Chinese solar cells, and a 25% tariff on Chinese steel, aluminum, electric vehicle batteries, and key minerals.
The list of goods subject to this tax increase has further expanded the scope of aluminum products subject to the 301 tariff imposed on China. At this point, aluminum products include aluminum scrap, aluminum powder, aluminum cables, undifferentiated aluminum structures, household aluminum appliances, aluminum ore and concentrates, unprocessed aluminum and aluminum alloys; Aluminum rods, profiles, and special-shaped materials; Aluminum wire; Aluminum strip; Aluminum foil; Aluminum tube; Aluminum pipes, almost all aluminum and its derivatives are included. It is reported that in addition to the 301 tariff, the United States has imposed high anti-dumping and countervailing duties on Chinese aluminum profiles, aluminum sheets, strips, foils and other products. The US Department of Commerce has ruled that the dumping rate of Chinese manufacturers/exporters is nearly 5%, and the tax rate for unqualified enterprises is 376%.
According to data from the General Administration of Customs of China, in July 2024, the domestic export of aluminum and its products was 861700 tons, of which exports to North America accounted for about 11% and exports to the United States accounted for about 8%.
The export consumption of aluminum terminals is mainly concentrated in new energy vehicles, photovoltaic frames, household aluminum doors and windows, etc. It is expected that the possibility of avoiding taxation solely through detours or assembly is low, and the export volume of aluminum and aluminum products from China to the United States may gradually decrease in the future.
Domestic inventory changes
In September, the overall inventory of the electrolytic aluminum plant area decreased, and the social inventory decreased significantly, resulting in a downward shift in overall inventory.
As of September 19th, incomplete statistics show that the main electrolytic aluminum plant inventory in China is 49000 tons, compared to 53000 tons on August 29th. Out of inventory is 4000 tons, but compared to 47000 tons on September 12th, the cumulative inventory is 2000 tons;
As of September 18th, the mainstream social inventory of aluminum ingots in China was 716000 tons, compared to the main factory inventory of 803000 tons on August 29th, with 87000 tons sold out.
Reasons for the rebound of aluminum prices in September
On the macro news front, the resonance between China and the United States’ PMI is downward, with the Federal Reserve cutting interest rates by 50BP in September and some central banks following suit.
2. The stock of raw material alumina is still tight, with low inventory. Overseas alumina transaction prices are accelerating their rise, while domestic prices are firm. The cost side is driving aluminum prices to improve.
Fundamental Overview
Supply side: The resumption of production in Yunnan region has been completed in the early stage, and the four major production areas of Shandong, Xinjiang, Inner Mongolia, and Yunnan have maintained full production. The output of electrolytic aluminum remains loose and stable in the short term. The mid-term variable focuses on the reduction of production during the dry season in Yunnan and other areas.
On the demand side: The continuous weakness of real estate completion data, coupled with a significant decline in the production of air conditioners and household refrigerators that are matched with it. The pessimistic expectation of demand is partly due to the seasonal off-season of household appliances, and partly due to the significant pressure on real estate completion and the strong negative feedback effect of aluminum consumption; More importantly, in terms of exports, the additional tariffs on new energy vehicles in the second half of the year may gradually be implemented, and photovoltaic exports are also facing certain pressure.
Import and Export: The United States has decided to impose tariffs on Chinese products, with a 100% increase in tariffs on electric vehicles and a 25% increase in tariffs on Chinese aluminum. In the first half of the year, the aluminum market has performed well in terms of export consumption, with impressive growth rates. With the implementation of the US tariffs, export consumption is likely to weaken, suppressing export consumption.
Future expectations
Recently, on the supply side, Yunnan electrolytic aluminum enterprises are nearing the end of their resumption of production, with high daily output and narrowed upward space; Overseas New Zealand direction, due to power shortages, supply has slightly decreased. On the demand side, downstream sectors have seen a rebound in operating rates, with electrolytic aluminum and aluminum rod inventories both experiencing a slight destocking. It is expected that supply and demand will stabilize in the short term, with the main focus on macro trading sentiment.
In the medium term, focusing on the supply tightening caused by the reduction in production during the dry season, the favorable supply side may be an important factor supporting the future strength of aluminum prices.
