Aluminum price is expected to usher in the second half of the year

After experiencing rapid acceleration, aluminum prices finally stabilized after entering July. According to my non-ferrous network monitoring, on July 5, aluminum prices closed at 15,716 yuan/ton, a slight increase of 2.7% from the low of 15,294 yuan/ton on June 27, but the aluminum price was still at historically low levels. “My Nonferrous Metals” believes that the current price of electrolytic aluminum is far below its intrinsic value, and it is expected to usher in a sharp rebound in the second half of the year, and it is not ruled out that the possibility of rising to 17500-18,000 Yuan/ton in the third quarter.

Aluminum prices fell to the bottom

Due to the weakening of aluminum demand at home and abroad caused by the global economic downturn, aluminum prices have been declining since March. According to the statistics of “My Nonferrous Metals”, taking the electrolytic aluminum in the Shanghai market as an example, the spot market price was 15,970 yuan/ton at the beginning of January 2012, and the price was 15,490 yuan/ton at the end of June, and the price fell by 480 yuan/ton, a decrease. It is 3%. ** Market, Shanghai Aluminum's offer at the beginning of January 2012 was 16,080 yuan/ton, and the price at the end of June was 15,535 yuan/ton, and the price fell by 545 yuan/ton, a decrease of 3.3%. As a matter of fact, the current mainstream production cost of electrolytic aluminum ingots in the market is about 1,400-16,000 yuan/ton or even higher, and aluminum prices and production costs have become “upside down”. The continuous decline caused the price of aluminum to fall below the production cost. Although some domestic companies started to reduce production, the release of new production capacity continued to cause China's primary aluminum output to record highs. According to data from the National Bureau of Statistics, the output of electrolytic aluminum reached a maximum of 1.678 million tons in May this year. From January to May, the total output of electrolytic aluminum in China was approximately 7.79 million tons, an increase of 10.8% from 7.206 million tons in the same period of last year. This was an increase of 4.63% last year. From January to May, the production of alumina was 15.217 million tons, an increase of 6.37% from 14.305 million tons in the same period of last year. The current situation of excess production capacity of electrolytic aluminum still exists, making aluminum prices continue to decline.

The second half of the price rebound can be expected

Under the weak aluminum prices, some companies began to seek help from the government and hoped that the government would have some preferential tariffs to ease the difficulties of production and operation. According to media reports, since the second quarter, Guizhou, Henan, Shaanxi, and other places have introduced preferential pricing policies for electrolytic aluminum companies. According to reports, Inner Mongolia, Ningxia and other provinces and regions are also considering launching corresponding preferential tariff policies. The electrolytic aluminum industry is a local pillar industry in some areas. The production of electrolytic aluminum companies is a driving force for the local GDP. It is self-evident that local governments cannot but consider giving corresponding support to electrolytic aluminum enterprises. However, many local industry experts do not believe that the local government will give a boost to electricity prices. “In the face of weak market demand and increasing supply, the decline in the cost of aluminum smelting will lead to a weaker primary aluminum price,” Baichuan Information pointed out in its latest report. From the mid- to long-term perspective, the supply bottleneck in the upstream bauxite mine and the increase in alumina prices will limit the space for aluminum prices to fall, and aluminum prices may gradually get rid of the “price upside down”. “In the second half of the year, with the expectation of loosening of the external currencies, the demand for downstream electrolytic aluminum will drive the consumption of electrolytic aluminum.” “My non-ferrous net” speculates.