Affected By Alumina Prices, Aluminum Prices Fell Further

- Oct 23, 2018-

1. Affected by the price of alumina, aluminum prices fell further, testing the support of 14,000 RMB. With the gradual resumption of production at the Brazilian Hydro Alumina Plant, the decline in overseas alumina prices is an established fact. At present, Australia's alumina FOB is 507 US dollars / ton, although the price is still higher than the domestic alumina price, but combined with quality considerations, domestic alumina prices have no advantage, so the future alumina export volume may drop significantly. The continuous correction of alumina prices has led to a downward shift in the cost of primary aluminum. The price of aluminum has fallen, and the price increase caused by the rising cost of the previous period. However, considering the tight supply of domestic ore and the general loss of aluminum production, the price of aluminum has fallen sharply. The space is not big.

2. Industry News:

According to SMM, Canada will cut the tax rate on aluminum cans imported from the United States by 10%.

According to the National Bureau of Statistics, China's primary aluminum production in September increased by 7.1% year-on-year to 2.79 million tons. China's primary aluminum production in January-September was 25 million tons, up 4.2% from last year.

3. Analysis of aluminum price: Last week, LME successively delivered the position in the case of spot discount, the market supply was relatively sufficient and the sentiment was strong. The US extended the deadline for the En+ and Rusal sanctions to December 12, and the news of the overlay of Hydro's 50% capacity was put on the ground. The supply tension in the overseas market was slightly slower, so London still handed over the position under the discount. The heating season policy has been introduced one after another. Enterprises within the scope have reached restrictions or will be exempted. The production reduction is far less than last year. It is expected that the heating season production quota documents will not be released in October. Only Henan Province has issued relevant documents and the production reduction is weak. Last year, the policy limit production was no longer supported by aluminum prices, and aluminum prices remained weak and volatile. However, after the policy has landed, the aluminum policy market in the past two years will return to the fundamentals to re-measure. As the new capacity of alumina is gradually released, the price of alumina gradually falls back to around 3,000 RMB. However, due to its own cost support, the decline in alumina price is limited. It is expected that the price will run near 3000-3300 RMB, and the cost end support of electrolytic aluminum will remain. . As the price of aluminum fell, the price of aluminum and the price inversion increased. The output of electrolytic aluminum reduced due to the loss in the market is still likely to increase. It is expected that the continued decline in the price will lead to more aluminum production being reduced. The current cost line has dropped to 14800. Nearby, so although the domestic new capacity is still to be invested more than 1 million tons, the current aluminum price is not conducive to the release of new capacity, and the loss or lead to more aluminum production cuts, so the increase in supply may not be as expected. Therefore, the cost side looks at the downside of aluminum or is limited.