Aluminum prices stopped falling and recovered in December

According to the data of business agency, the average market price of domestic aluminum ingots in East China was 20370 yuan / ton on December 31, up 7.78% from 18900 yuan / ton at the beginning of the month (December 1).

At present, the aluminum price has fallen below the high and volatile operation range in the early stage. At the peak of this year (October 19, 2021), the average market price of aluminum ingots is 124240 yuan / ton, which has fallen by 15.97% recently. Based on the average market price of 15726.67 yuan / ton of aluminum ingots at the beginning of the year (January 1, 2021), the cumulative increase was 29.53%.

Price rise motivation

In December, the domestic aluminum price was significantly driven by the external market, especially affected by the continuous fermentation of the European energy crisis and the news of production reduction of many aluminum plants in Europe. Although the short-term growth of LNG imports from the United States to Europe partially alleviated the market’s concerns about European supply.

European energy problems have tightened the supply of aluminum in Europe, and European aluminum enterprises have begun to gradually formulate shutdown plans. According to estimates, the current shutdown scale is expected to be 500000-600000 tons, and the potential production reduction scale is as high as more than 2 million tons. It is necessary to pay attention to whether the tightening of supply caused by European energy problems will lead to the further expansion of the shutdown scale of European aluminum enterprises. According to IAI data, the total capacity of electrolytic aluminum in Europe accounts for 11% of the global total capacity, and 26% of the overseas aluminum smelting capacity except China. According to CRU data, in Q4 of 2021, nearly 2.4 million tons of aluminum smelters in Europe will be powered by natural gas.

At home, the market has good expectations for the improvement of domestic real estate demand. According to the data of aluminum ingot destocking, the recent consumption is good. Although the cost support is weakened, the aluminum ingot price is still likely to continue to rise under the expectation of continuous destocking trend and weak overseas supply. Recently, attention has been paid to the market’s tolerance for seasonal accumulation after the Spring Festival is approaching, the downstream operating rate moves down and the end consumption decreases.