Market Review

Bauxite: The Bauxite Market Is Operating Smoothly

The bauxite market was relatively calm this week. During this period, there were not many transactions for domestic or imported mines. Some long-term orders are still being executed. New long-term orders have not yet reached the time for centralized signing, so the current market does not have too many transactions. More transactions.

Mines in the Shanxi region that have undergone production inspections due to iron ore accidents will have to resume normal production after a round of safety inspections. At present, there is no alumina plant in a state where raw materials are in short supply due to the shutdown of mines, but the operating rate of domestic mines has not been very high in the first half of the year. Therefore, some alumina plants have increased the use of imported mines.

Imported bauxite continued the state of the previous week and were tepid. Sea freight is still at a high level, and the price of imported ore continues to maintain. According to customs data, the import volume of bauxite in May was 9.113 million tons, an increase of about 340,000 tons compared with the previous month. Due to the slightly tight domestic ore supply, manufacturers have no other choice even if the price of imported ore rises. At present, domestic alumina plants are basically in normal production, and the demand for imported ore will continue, and the import volume in June will not vary greatly.

In summary, the domestic and foreign markets have entered a mid-year stable phase. The tight supply of domestic mines will not ease in a short period of time, while the regular demand for imported mines has always been there. The high level of ocean freight will reduce the profits of import manufacturers, and the difficulty of operation for trading manufacturers is still Very large, this calm state may continue for some time.

Alumina: The Subject of Bauxite Shortage Pushes Up Market Purchasing Sentiment

Market Review

The alumina spot market was relatively active this week, and the benchmark transaction price of Shanxi and Henan was more than 2480 yuan under the current situation that 2,470 yuan per ton was the mainstream in the previous period. As of this Friday, the northern comprehensive price of ALD is 2470-2500 yuan/ton, the weekly average price is the same month-on-month; the domestic spot weighted price is 2482.1 yuan/ton, the weekly average price is the same.

Tighter Supply Of Bauxite Has An Increasing Impact On Production

Affected by the safety rectification and inspection of the Shanxi and Henan area, the mining and supply of bauxite ore in various places have been significantly affected, whether underground or open-pit mining. Even if not all mines are shut down, and the efficiency of excavation and mining or stripping and mining is reduced, the rate of ore entering the factory for alumina companies is much slower than the rate of consumption, and most companies consume inventory to ensure production. At the ALD Qingdao Bauxite Forum this week, many alumina companies expressed their concerns about the tight supply of ore, either seeking high-grade imported ore for blending, or seeking to judge the possibility of long-term use of imported ore. It should be noted that under the current alumina price level, alumina companies still have demands to increase production and reduce scale costs, and the contradiction between stable production and high output and insufficient ore supply or even higher costs continues to exist.

Overseas Prices Keep Rising Slightly

ALD today learned about the latest Australian alumina transaction of 30,000 tons. The FOB price of Western Australia was US$285, an increase of US$2 compared to the previous period. The goods were loaded in early August and wire transfer before loading and unloading. According to the current exchange rate, the tax-paid renminbi price of China's major ports is more than 2500 yuan, and it is reported to be sent to China. According to ALD, Bayuquan Port plans to reach about 330,000 tons of alumina from the end of this month to the end of July, and the recent inventory has dropped to about 130,000 tons.

Market Outlook Forecast

The recent bearishness of the alumina market is mainly due to the continuous increase in the trend of output, especially the increased potential of south-to-north transportation in Guangxi due to the phased imbalance of supply and demand. The alumina market is profitable because of the rising cost and the expected periodical decline in supply in the northern market. The decline in supply is due to the reduction in alumina production. The direct factor for the reduction in alumina production is the outage of ore supply, and the fundamental reason for the outage is the length of the mine safety rectification cycle. And the intensity of policy implementation. On the whole, alumina prices are still fluctuating within a range, and it is difficult to rise or fall.

Figure 1 Weighted Price Trend of Domestic Spot Alumina

Data Source: ALD

Aluminum Hydroxide: Demand for Aluminum Hydroxide Is Under Pressure

Market Review

The trading center of aluminum hydroxide has temporarily stabilized, and the spot gains have slowed down. Shandong, Shanxi and other places still have small gains. The trading in other regions is stable, and it is not easy to continue to push up. New spot orders in Shandong area increased by 5-10 yuan/ton, and the price is referenced at 1,600-1615 yuan/ton; Shanxi area negotiated stable, and the price increased by 10 yuan/ton to 1590-1610 yuan/ton; Henan area shipments were mostly implementation agreements. The spot transaction is limited, and the price is referenced at 1590-1600 yuan/ton; Guangxi area is renewed steadily, the price is referenced at 1570-1580 yuan/ton; there are not many new spot orders in Guizhou area, and it is difficult for enterprises to promote the price. The price is referenced at 1570-1580 yuan/ton.

Outlook Forecast

The recent market performance of aluminum hydroxide has been flat, and the rising trend has basically come to an end. With regard to alumina, short-term prices are under pressure, and medium- and long-term supply is under pressure. There is a dilemma between the ups and downs, and there is a lack of clear guidance for aluminum hydroxide. In terms of demand, the scope of production suspension of aluminum fluoride has been reduced, and Sanyi Chemical and Zhongse Shaoxing have resumed production, but the overall operating rate is still low, and the purchase of aluminum hydroxide has been suspended; the direction of refractory materials, water purifiers and fillers is more than that of aluminum hydroxide. Mainly long-term orders, the shipment situation is stable. ALD believes that due to weak demand in the short-term, the high pricing of leading companies has weakened the driving force of aluminum hydroxide, and the medium and long-term market is under pressure, and the price fluctuates but the fluctuation range is not large.

Aluminum: The Macro Aspect Is Relatively Strong but The Demand Weakens, Aluminum Prices Are Difficult to Change the Shock Pattern

The overall performance of aluminum prices this week fluctuated strongly, and the main support came from two aspects: one was the announcement of the first batch of reserve dumping plans, and the supply of aluminum was relatively limited; the other was the positive macroeconomic atmosphere at home and abroad, which brought demand and prices to the aluminum market. support. It should be noted that under the situation that the dumping of reserves is about to land and seasonal demand has been weakened, the slowing of the destocking rhythm and the pressure of periodic supply rebounds may make it difficult for short-term aluminum prices to get rid of the shock pattern.

The Macroeconomic Environment At Home And Abroad Continues To Improve

On the domestic front, the State Reserve Bureau announced the first batch of aluminum reserves release details on Tuesday. The 50,000 tons of aluminum input was slightly lower than market expectations, and the negative effect brought by the dumping of reserves was further diminished. At the same time, the National Energy Administration of China launched a county-wide rooftop distributed photovoltaic development pilot. The broad prospects may drive the demand for industrial aluminum profiles. Coupled with the interference of the upcoming national carbon emissions trading on the supply side, the fundamental support of supply and demand continues to be consolidated. Internationally, Biden announced that it has reached an agreement with senators from both parties on a $1.2 trillion infrastructure plan, and nearly half of the expenditure is spent on new projects such as roads, power facilities, and broadband Internet. Russia plans to impose a 15% export tariff on non-ferrous metals from countries outside the Eurasian Economic Union on August 1, of which aluminum is US$254/ton. According to data from the General Administration of Customs, my country imported 147,300 tons of primary aluminum from Russia from January to May 2021. From an international perspective, both demand recovery and increased trade costs also support aluminum prices.

The National Carbon Emissions Trading Market Will Open

On June 22, the Shanghai Environment and Energy Exchange issued the "Announcement on Matters Related to National Carbon Emissions Trading", which clarified the methods, time periods, accounts and other related matters of national carbon emissions trading in order to regulate national carbon emissions trading. And related activities to protect the legitimate rights and interests of all parties to the transaction and maintain the order of the transaction market. In order to implement the deployment of national carbon peak and carbon neutral actions, promote the construction of the national carbon emission trading market, and give full play to the important role of industry associations in industry management, industry self-discipline and services, the Department of Climate Change Response of the Ministry of Ecology and Environment has advised China Nonferrous Metals The Metal Industry Association issued a letter of entrustment, formally entrusting the China Nonferrous Metals Industry Association to carry out work related to the construction of the national carbon market in the non-ferrous metal industry. From the perspective of the work direction in the commission letter, the formulation and update of the carbon allowance allocation plan for electrolytic aluminum will be the first step taken by the industry to participate in carbon emissions trading. The possibility of a decline in the industry’s supply capacity in the short term is not high, but rising corporate costs has become inevitable.

Seasonal Weakening of Terminal Demand In The Holiday Atmosphere

July 1, 2021 is the 100th anniversary of the founding of the Communist Party of China. Recently, all walks of life across the country are actively holding grand commemorative activities. In order to create a safe and stable atmosphere for production and life, some areas in East China have required urban housing construction and rail transit construction to be suspended for inspection. Affected by this, the demand for related raw materials including rebar and aluminum profiles has declined. According to research conducted by ALD, since June, the shipment performance of aluminum ingots and aluminum rods has deteriorated, especially in the aluminum rod market that can be directly used for the production of profiles. The rise in finished product inventories of processing enterprises has confirmed the seasonal weakening of terminal demand. Compared with profile companies, the production and sales of sheet, strip, foil and aluminum rods are relatively stable, which still supports industry demand.

Data Source: ALD

Aluminum Bar: Processing Fees Are The First To Adjust, And Benchmark Price Trends And Psychological Expectations Deviate

Market Review

This week, the aluminum rod processing fee is the first to be adjusted, which is not only related to the current high domestic aluminum rod supply, but also related to the cash flow demand from the semi-annual corporate inventory and financing perspective. However, driven by the favorable promotion of the first batch of dumping of reserves by the State Reserve, the deviation of the matching degree of dumping resources and consumption areas, and the obvious correction of the US dollar index, the domestic aluminum benchmark price once again surpassed the 19000-marks, showing a clear upward trend as a whole. There is a clear deviation from the current market psychological expectations.

Abandon The Reserve And Settle, The Aluminum Benchmark Price Will Hit 19000-Mark

On June 22, the State Reserve Bureau disclosed the quantity of the first batch of dumped products and related details. Whether it is the first batch of dumped reserves or the dumped land, it can be said to be far lower than expected. The first batch of dumped reserves is only 50,000 tons, and from the perspective of dumping aluminum resources, the first batch of quantities is relatively limited except for Henan in major consumption areas. Superimposing this week's dollar index from last week's high of 92.4 to the current 91.7, and the United States' relative tolerance to inflation, pushing up the domestic aluminum benchmark price once again surpassed the 19000-marks, showing obvious signs of rising overall. However, from the perspective of industry fundamentals, before the semi-annual report settlement threshold, companies are willing to maintain cash flow, represented by construction profiles, there are some signs of decline, and as the traditional off-season is expected to strengthen, market trends and psychological expectations There is a certain deviation.

Aluminum Bar Processing Fees Take The Lead In Callback

Entering this week, the domestic aluminum rod processing fee has changed from the relatively high situation in the early stage. The aluminum rod processing fee in South China dropped to below 400 yuan at the beginning of the week, a drop of 50-100 yuan compared with last week, and this first adjustment was significantly ahead of schedule. The benchmark aluminum price rebounded. From the perspective of other domestic consumption areas, most of the aluminum rod processing fees in North China have fallen to the range of 300-350 yuan, and some rod manufacturers have reported that the shipping pressure has increased slightly compared with the previous period. Some manufacturers reported that the shipments of aluminum ingots and aluminum rods in Shandong are also showing signs of slowing down. This is not only related to the current high domestic aluminum rod supply, but also related to the cash flow demand from the perspective of semi-annual corporate inventory and financing.

Low Social Inventory Adjustment of Aluminum Bars

This week, the aluminum rod inventory dropped from 110,000 tons last week to 107,000 tons, a weekly drop of 3 million tons, and it has been in a low-level adjustment situation recently. Judging from the inventory changes of some warehousing companies, the inventories of aluminum ingots and aluminum rods have rebounded slightly at the same time, but the rebound is relatively limited.

Key Prices

Aladdiny (ALD) Statistics