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In recent days, the London Metal Exchange (LME) market has been overcast. Small metals such as nickel and tin have continued to fall, dragging down the metal market. However, aluminum has changed in the past and its position has been steadily increasing. The price has risen against the trend. After breaking through the important resistance level of $2,680, the trend has become extremely strong.
Undoubtedly, Lun Aluminum's strong growth is mainly due to strong global consumption. Since the summer of this year, European aluminum consumption has continued to grow strongly. During the summer, European spot premiums were as high as US$65/tonne (before tax), and aluminum was in short supply. At present, the spot premium in Europe remains at more than 40 US dollars.
Consumption in North America also performed well. In August, orders for aluminum products not including cans in North America increased by 14.3% year-on-year, which was the fourth consecutive month of growth. From the average growth rate of 6 months, at least at the end of the year Previously, North American aluminum demand will remain strong.
On the supply side, global production has remained relatively stable. In particular, the current output of electrolytic aluminum began to shift from countries with higher energy prices to countries with lower power costs. This shift in the pattern has enabled the global output of electrolytic aluminum to remain stable this year. According to data released by the International Aluminum Association (IAI) on September 20, global aluminum output fell by 4,000 tons to 2.015 million tons in August, while in January 2006, global production was 2.013 million tons.
Since the summer, the decline in primary aluminum production in Europe was mainly due to the high energy prices and the electrolytic aluminum plant closing some of its production capacity. With the drop in international crude oil and natural gas prices, production is expected to stabilize. According to data released by the Aluminum Association of America, the output of primary aluminum in the United States decreased by 8.3% year-on-year in the first three quarters of this year. In the third quarter, the average daily output of primary aluminum fell by 626 tons to 6,085 tons. In September, the average daily output fell to 6,085 tons. In addition, the boom in aluminum consumption in China and the reduction in exports of primary aluminum have contributed to the global market, which has also contributed to the rise in aluminum prices. In terms of inventory, the declining momentum of LME inventory since the summer has continued, indicating that the momentum of consumption growth has been maintained, but the current inventory of around 680,000 tons is still at a relatively high level in history, which is a pressure on LMEL's rise.
The supply of domestic electrolytic aluminum continues to maintain steady growth. Although investors are very worried about the future pressure of excess supply of domestic electrolytic aluminum, at least until the end of this year, such concerns are unnecessary. According to statistics from the China Non-Ferrous Metals Industry Association, China's electrolytic aluminum production in September this year was 81.57 million tons, only an increase of less than 8,000 tons compared with August. In the first nine months of this year, China’s cumulative production of electrolytic aluminum was 6.709 million tons, a year-on-year increase of 16.8%. The daily output in September was 27,910 tons, which was an increase of 4.3% from August's daily output of 26,600 tons, slightly lower than expected. It is expected that by the end of this year, China's electrolytic aluminum production will maintain the monthly growth rate of 4%-5%. Maintain relatively stable growth.
It is worth noting that since the domestic aluminum prices have continued to outperform the external market in the past two months, the ratio between the two cities has been restored, and domestic primary aluminum exports are not profitable. As a result, domestic primary aluminum and aluminum alloy exports declined in September, which will increase. Domestic supply will help improve domestic supply and demand balance.
According to customs statistics, from January to September of this year, China's total exports of aluminum and aluminum alloys were 962,893 tons, a decrease of 5.8% compared with the same period of last year, and exports in September were 109,137 tons, a decrease of 12.2% from 124,301 tons in August. At the same time, China imported 191,364 tons of aluminum scrap in September, an increase of 28% from 149,113 tons in August. It was a month with a large number of imports in a single month in 2006. Attention should be paid to this and remain vigilant. Of course, this is also explained from the side. The current domestic supply of primary aluminum is tight.
Domestic consumption continues to grow rapidly. In the second half of the year, the domestic economy will continue to maintain a healthy growth, and the growth in construction and transportation will be strong. It will continue to form a strong push for aluminum consumption. According to the data released by the National Bureau of Statistics, in the first three quarters of this year, the total investment in fixed assets was 71,942 billion yuan, a year-on-year increase of 27.3%. Among them, the investment in urban fixed assets was 618.8 billion yuan, an increase of 28.2%, an acceleration of 0.5 percentage points year-on-year. The investment in real estate development was 1,290.2 billion yuan, an increase of 24.3%. The railway transportation industry increased by 107.0%, auto production increased by 24.0%, of which the sedan grew by 41.5%.
In addition, since October is the peak season for traditional consumption, good consumption will help the spot market to maintain the current tight spot supply pattern. Last week, there was a significant increase in domestic stocks, but it was mainly due to the high domestic spot prices and the lack of power from downstream consumer purchasers. However, as downstream manufacturers have not been able to establish effective inventory, it is believed that consumers will soon return to the market.
In addition, due to the reduction of export tariffs on aluminum products by the country, most domestic export-oriented aluminum processing companies have taken over overseas orders with higher production capacity. It is expected that within three months of the transition period, the export of aluminum products will be the domestic aluminum boom. Consumption plus a handful of force. In the long-term, with the domestic aluminum profile manufacturers continuing to improve the production of high-value-added products in recent years, the export volume of domestic high-grade aluminum materials has increased significantly. The international market is facing Chinese profiles, aluminum pipes and special aluminum products. The strong demand will offset the negative impact of the export tax rebate on the export of domestic aluminum products.
According to a comprehensive analysis, the current global economic growth instability is putting pressure on the long-term trend of aluminum prices, but in the short term, it will be affected by strong consumer spending and supply decline. In particular, the continued prosperity of Chinese consumption and the reduction of primary aluminum exports make investors very optimistic. Aluminium has already had a number of favorable factors for growth. It is expected that before the end of the year, Shanghai Aluminum can steadily increase its price to maintain its high level, and it does not even rule out the possible impact of the first half's high point driven by Lumano.