February 2020 cable raw materials (aluminum) monthly report

First, the fundamentals

1.
In January 2020, China's electrolytic aluminum output was 3.
07 million tons, an increase of 3.
3% year-on-year, as of the end of January, the national electrolytic aluminum operating capacity scale was 36.
52 million tons / year, the national electrolytic aluminum enterprise operating rate was 89.
5%, the overall operating rate level increased by 0.
8 percentage points compared with the end of December 2019, Qinghai, Inner Mongolia and other aluminum enterprises stopped production capacity and resumed production, Yunnan, Sichuan and other provinces continued to put new production capacity
.
The domestic epidemic has not caused domestic electrolytic aluminum enterprises to reduce production in the short term, but some enterprises have reported that due to the restriction of road logistics and the extended impact of the Spring Festival holiday, the inventory of alumina raw materials is tight
.
It is expected that domestic electrolytic aluminum production in February will be 2.
88 million tons, an increase of 1.
4%
year-on-year.

2.
China's alumina output in January was 5.
8 million tons, down 1.
19% month-on-month and 8.
37%
year-on-year.
The average daily output in January decreased month-on-month mainly due to two reasons: first, due to market factors, Guangxi Xinfa's annual operating capacity fell to around 1.
8 million to 2 million tons; Second, although the cost of alumina in January was reduced due to the decline in ore and caustic soda prices, the loss area of domestic alumina production capacity was reduced, but most of the enterprises that had previously reduced production were due to ore replenishment (Chalco Huaxing) and strict environmental protection inspection during the heating season (Henan Sino-American, Luoyang Wanji, etc.
) did not significantly resume production and increase production, and large enterprises such as Jiaokou Xinfa also had no intention
of resuming production.
The current epidemic has seriously affected the efficiency of northern automobile transportation, and the raw material inventory of some alumina plants has been tight
compared with January.
Alumina production in February is expected to be about
5.
2 million tons.

3.
In 2019, global aluminum production decreased by 0.
7%
year-on-year.
China's production is expected to be 35.
044 million tons, which currently accounts for about 56% of the world's
total production.
In 2019, China's apparent demand increased by 0.
8%
year-on-year.
China's net exports of unwrought aluminum were 287,000 tonnes in 2019 and 363,000 tonnes in 2018
.
In 2019, China's net exports of half-cheng aluminum products were 4.
807 million tons, compared with 4.
691 million tons
in the same period last year.

4.
In 2019, the primary aluminum production of the 28 EU countries increased by 0.
7% year-on-year, and the output of the North American Free Trade Area (NAFTA) increased by 4.
2%
year-on-year.
EU-28 demand was 315,000 tonnes
less than in 2018.
Global primary aluminum demand in 2019 decreased by 1.
6%
compared to 2018.
In December 2019, primary aluminum production was 5.
4332 million tons, and consumption was 5.
3207 million tons
.

5.
At the end of January 2020, China's imported bauxite inventory was about 26.
6 million tons, down 1.
74% month-on-month and down 18.
64%
year-on-year.
At the end of January, the inventory of imported bauxite in Shandong was about 23.
4 million tons, down 1.
06% from the previous month.
The inventory in Shanxi was about 1.
37 million tons, a decrease of 12.
74% from the previous month; The inventory in Henan was about 990,000 tons, down 9.
17% from the previous month; Chongqing's inventory was about 500,000 tons, an increase of 25% month-on-month; Inventories in Inner Mongolia were about 300,000 tons, flat
month-on-month.
According to statistics, the number of days of imported bauxite inventory dematerialization at the end of January was 96 days, unchanged
from the previous month.

Second, the market review

After the Spring Festival holiday, affected by the decline in the external market and the epidemic, Shanghai aluminum fell sharply, with China's stimulus measures and epidemic worries slowed down, Shanghai aluminum stopped falling and stabilized, but in view of the slow resumption of work downstream, consumption recovery has not been clearly reflected, market confidence is insufficient, aluminum prices are difficult to gain upward momentum, the overall shock of Shanghai aluminum main force in the 13600-13800 range
.
China's epidemic has not yet ended, the world has once again caused epidemic concerns, aluminum prices hit a new low in February, the short-term epidemic has not yet ended, it will take time for small and medium-sized enterprises to fully resume work, and short-term inventories continue to accumulate significantly, and it is difficult for the market to regain confidence
.
The short-term weak pattern of Shanghai aluminum remains unchanged, and we will temporarily pay attention to the support of the 13000 mark
.
Stable
in the medium term.

In terms of the external market, this month Lun aluminum low volatility, since mid-January, due to the new coronavirus epidemic in Wuhan, China suppressed market sentiment, Lun aluminum all the way down, intraday fell below the 1700 mark, the lowest in early February down to 1685 US dollars, with China's stimulus measures, and China's epidemic control gradually improved, Lun aluminum stopped falling and stabilized, but obviously lack of favorable boost, Lun aluminum on the action is insufficient
。 Subsequently, the global epidemic broke out again, and Lun Aluminum continued to fall, reaching a low of $1,665, a new low since November 2016; From the perspective of the plate, short-term epidemic worries still exist, before the epidemic has not been controlled, still maintain a weak idea, it is expected that in March Lun aluminum first fell and then stabilized, focusing on the $1630-1750 range
.

East China: The beginning of this month coincided with the end of the Spring Festival holiday, due to the spread of Wuhan new coronavirus worries during the festival, Lun aluminum fell, dragging down domestic aluminum prices, superimposed on the global epidemic outbreak, resulting in aluminum prices falling again, as of February 28, the average spot aluminum price in East China was 13170 yuan / ton, down 940 yuan / ton from the end of January, a monthly decline of 6.
67%.

The current discount is 60
.
In terms of market transactions, the market has sufficient supplies, and traders have shipped a small amount, but in view of the slow resumption of work downstream, the overall transaction is relatively weak
.

South China: As of February 28, the price of aluminum ingots in South China was between 13,420-13,520 yuan / ton, down 1,010 yuan / ton from the end of January, a monthly decrease of about 7%; The price difference between Guangdong and Shanghai is 300 yuan / ton
.
Affected by the spread of the global epidemic, market sentiment is pessimistic, downstream wait-and-see is less, some traders receive goods at low prices, and trading is relatively weak
.

3.
Inventory

Since January 2020, the overall inventory of London aluminum has shown a downward trend, as of February 27, the total inventory of London aluminum was 1092275 tons, an increase of 196075 tons from the end of January, a decrease of 15.
22%; Although inventories showed a downward trend, the global epidemic added to market panic, and the boost of London aluminum was limited
.

Due to the traditional Spring Festival holiday and the Wuhan new pneumonia epidemic, the downstream resumption of work is slow, and the aluminum inventory of the Shanghai Stock Exchange has risen from a fall, as of February 21, the aluminum inventory of the Shanghai Stock Exchange was 409635 tons, an increase of 178738 tons from the end of January, an increase of 77.
4%, and the current total inventory is close to the level
of July 2019 。 Domestic social aluminum inventory, as of February 27, domestic electrolytic aluminum social inventory (including SHFE warehouse receipt): Shanghai area 121,000 tons, Wuxi area 52.
7 tons, Hangzhou area 120,000 tons, Gongyi area 210,000 tons, South China Sea area 326,000 tons, Tianjin 57,000 tons, Linyi 13,000 tons, Chongqing 11,000 tons, consumption area aluminum ingot inventory total 1.
385 million tons, an increase of 450,000 tons
from the beginning of the month.

Fourth, the waste market

In February, the price of scrap aluminum fell in all regions; At present, the mainstream price of clean machine aluminum in South China is around 9900, and the price of aluminum wire is around 12100; At present, the mainstream receipt price of aluminum alloy spraying old materials in East China is around 10300, aluminum wire is around 11700, and cans are around
8550.
Market transactions: due to the impact of the epidemic, the resumption of work after the year is delayed, although most medium and large smelters have resumed work and entered the market for procurement, while the overall operating rate of small and medium-sized enterprises is insufficient, and most of the recyclers have not yet entered the market, the market circulation is limited, with the price falling, the market wait-and-see sentiment is strong, and the scrap aluminum market transaction is generally weak
.

The overall price of scrap aluminum market fell this month, most of the recyclers are still in a state of waiting for work, and it is expected that work will resume in early March, and the global epidemic spreads, the market wait-and-see sentiment is strong, and the short-term scrap aluminum price trend is weak or
downward.

5.
Market outlook

China's epidemic has not yet ended, the world has once again caused epidemic concerns, Shanghai aluminum once again followed suit, the lowest to 13070, a new low
since mid-January 2017.
From the perspective of the market, although the domestic epidemic situation has improved, governments at all levels continue to introduce relevant policies to support and ensure the resumption of work, but it will take time for small and medium-sized enterprises to fully resume work, and short-term inventories continue to accumulate significantly, which is expected to last until mid-to-late March, and the financial pressure of middle and upstream enterprises is high
.
Coupled with the worsening of the overseas epidemic, it is difficult for the market to regain confidence
.
The short-term weak pattern of Shanghai aluminum remains unchanged, and we will temporarily pay attention to the support of the 13000 mark
.
It is expected to stabilize
in the medium term.
The overall fluctuation range in March was 12800-13500
.