Aluminum is a light metal, its compounds are widely distributed in nature, and aluminum and aluminum alloys are currently one of the most widely used and most economical materials. World aluminum production has been the leading producer of ferrous metals since 1956. The current aluminum production and consumption (in tons) is second only to steel, making it the second largest metal for human applications.
The price of aluminum ingots is also the same as other metals, and the price is easy to fluctuate. The main reasons affecting futures prices are:
1, supply and demand relationship
The relationship between supply and demand directly affects the market pricing of commodities. When the market supply and demand relationship is temporarily balanced, the market price of the commodity will fluctuate within a narrow range; when the supply and demand relationship is unbalanced, the price will fluctuate greatly. In the aluminum futures market, investors can focus on an indicator that reflects the change in the relationship between supply and demand of aluminum – inventory.
2. Supply of alumina
Aluminium oxide costs about 28% to 34% of the cost of aluminum ingot production. Due to the high concentration of the international alumina market, most of the world's alumina (80% to 90%) is sold through long-term contracts, so there is very little alumina available for trading in the spot market. In recent years, the scale of China's electrolytic aluminum production has been expanding, which has led to the growing domestic demand for alumina. Currently, about two-thirds of imported alumina needs to be purchased from the spot market. China's large purchase of alumina in the international market directly boosted the sharp rise in international alumina prices.
3. The impact of electricity prices
The electrolytic aluminum industry is also known as the “electric tiger” industry. At present, the average power consumption per ton of aluminum in domestic and foreign aluminum plants is controlled below 15,000 kwh/t. Experience with aluminum ingot production in Western countries shows that electricity is considered a dangerous production when electricity costs exceed 30% of aluminum production costs.
As China is a country with energy shortages, several times the price of electricity has raised the average price of aluminum companies to above 0.355 yuan / KWh, which is nearly 4 points / KWh higher than in 2003, which means that the production cost of aluminum enterprises has increased by 600. yuan. Therefore, the power factor not only affects the production of electrolytic aluminum in China, but also affects the price of the domestic and international aluminum market.
4. The impact of the economic situation
Aluminum has become an important non-ferrous metal species, especially in developed countries or regions, where aluminum consumption has been highly correlated with economic development. When a country or region's economy develops rapidly, aluminum consumption will also grow at the same time. Similarly, the economic downturn will lead to a decline in aluminum consumption in some industries, which in turn will lead to fluctuations in aluminum prices.
5. Impact of changes in aluminum application trends
Changes in the use and use of aluminum ingots in major industries such as automobile manufacturing, construction, wire and cable will have a major impact on the price of aluminum.