June 2022 cable raw materials (aluminum) monthly report

First, the fundamentals

1.
According to the latest data from the National Bureau of Statistics, the output of electrolytic aluminum in May 2022 was 3.
423 million tons, a year-on-year increase of 3.
1%, setting a new record high
.
The cumulative output from January to May was 16.
395 million tons, a year-on-year increase of 0.
3%.

2.
According to data from the National Bureau of Statistics, China's alumina output in May 2022 was 6.
988 million tons, a year-on-year increase of 5.
4%; The cumulative output from January to May was 32.
351 million tons, down 0.
5%
year-on-year.

3.
According to the latest data from the General Administration of Customs, in May 2022, China exported 676,600 tons of unwrought aluminum and aluminum products, a year-on-year increase of 54.
1%; From January to May, the cumulative export was 2.
9018 million tons, a year-on-year increase of 34.
2%.

In May, China imported 188,400 tons of unwrought aluminum and aluminum products, down 16.
4% year-on-year; From January to May, the cumulative import volume was 896,600 tons, down 23.
3%
year-on-year.

4.
Imports: According to data from the General Administration of Customs, China's imports of alumina (alumina, except artificial corundum) in May were 71,454.
53 tons, down 2.
75% month-on-month and 50.
82%
year-on-year.
Among them, Australia was the largest supplier, importing 63,000.
00 tons from the country in the month, down 5.
62% month-on-month and 32.
39%
year-on-year.
May 2022 net alumina imports - 117,300 tons
.

5.
Exports: According to data from the General Administration of Customs, China exported 188,800 tons of alumina in May 2022, an increase of 12.
6% month-on-month and a year-on-year increase of 3,907.
16%, once again refreshing the highest export record
since January 2019.
Among them, the amount of alumina exported to Russia was 153,000 tons, an increase of 23.
4%
month-on-month.

Second, the market review

In June, Shanghai aluminum showed a high and falling trend, the overall fluctuated in a wide range between 18600-21250, at the beginning of the month, the market was boosted by the news of the improvement of the epidemic in Shanghai and the resumption of work and production, the market expected a strong operating rate of aluminum enterprises, Shanghai aluminum rebounded at a low level, rising to a high of 21220 in the month, and then due to the storage event of repeated mortgages in Guangdong, the market risk aversion went higher, and the high inflation pressure in the United States coupled with high interest rate hike expectations, Shanghai aluminum out of a sharp correction trend, after falling below the 20,000 mark continued to fall, after the middle of the month, the result of the interest rate hike landed, While in line with expectations, the 75 basis point rate hike also indicates that this is the Fed's largest single rate hike since November 1994
.
Subsequently, although the Fed promised to resolutely restore the inflation rate to 2%, the market continued to fall, and on June 27, the market fell to the lowest level since November 22, 2021, the bearish news came out, and the low level of the market at the end of the month fluctuated, although it returned to above 19,000, but lacked the support of substantial positive news, and the rebound height was small
.

In terms of the market, after the epidemic, the market recovery in June was obviously less than expected, coupled with the continuous decline in prices, traders were more cautious to enter the market, and downstream enterprises just needed to receive goods at the bottom
.
In addition, it is understood that due to the continuous decline in prices, the high price of electricity, the pressure of electricity costs in some areas is greater, and the cost of electrolytic aluminum has been close to the cost line, or even has lost money, mainly concentrated in Guangxi, Fujian and Chongqing and other provinces
.

East China: June the world set off a round of interest rate hikes, causing market panic, coupled with inflation continues to ferment, the negative sentiment brought by the recession crisis still dominates the market, aluminum prices should fall, June decline space expanded, as of the end of the month, East China spot aluminum prices in 19030-19070 yuan / ton, down 1710 yuan / ton from the end of May, down 8.
24%, the current spot slightly discount of 30 yuan
.

South China: South China aluminum prices in June fluctuated downward, aluminum ingot prices fell below the 20,000 mark after continuing to fall, the center of gravity shifted down significantly, as of June 30, South China aluminum ingot ticket price between 19350-19450 yuan / ton, down 1620 yuan / ton from the end of May, down 7.
7%, South China East China aluminum ingot price difference in 350 yuan / ton
.
Due to the continuous decline in prices, downstream enterprises are afraid of falling seriously, and they are more cautious in entering the market to receive goods, which drags down market transactions
.

3.
Inventory

The latest data from the London Metal Exchange (LME) in June 2022 shows that London aluminum stocks continue to be in a downward trend, and as of June 30, stocks have fallen to 373275 tons, and then hit a new low
.
It is understood that the accelerated decline of Lun aluminum stocks since this year has a lot to do with EU sanctions against Russia, from more than 30% of Russian aluminum production to Europe supply, sanctions lead to the obstruction of shipments to European ports, so that Russian production of aluminum has to be shipped to Asia, manifested in the transfer of inventory from Europe to Asia
.

In June 2022, the decline in Shanghai aluminum inventory accelerated, and the current Shanghai aluminum inventory has dropped to 210957 tons, down 74610, or 26.
13%, from the end of May; In addition, it is understood that as of June 27, the inventory of electrolytic aluminum in 8 mainstream consumption areas in the country was about 746,000 tons, and the decline rate has slowed down
.

Fourth, the waste market

In June, the scrap aluminum market suffered a heavy setback, due to the decline in aluminum prices, scrap aluminum prices followed the decline obviously, generally fell more than 1,000 yuan, aluminum wire, aluminum alloy profiles fell widely, some areas fell more than 1,500 yuan / ton
.
As of the end of the month, the aluminum alloy spraying old material in East China was around 14500, a decrease of about 1400; The price of cans is around 12,800, down about 1,000, and aluminum wire is around 17,000, down about
1,300.

In terms of the market, in the middle and early part of June, due to the decline in prices, the willingness of holders to ship goods due to losses was not high, and the market supply was tight, but as the market fell continuously, the willingness of holders to raise prices began to loosen, and the phenomenon of loss-based shipments appeared, and the market supply gradually increased.

In addition, it is understood that due to the continuous decline of the market, the market panic is heavier, the current scrap aluminum yard willingness to receive goods has declined, the price is pressed again and again, the overall market transaction is limited
.

At present, the macro is bearish, the fundamentals are not substantially positive, short-term aluminum prices are difficult to improve, scrap aluminum prices are still difficult to improve, and the overall performance is still weak
.

5.
Market outlook

In June, Shanghai aluminum showed a trend of rushing high and falling, and the overall fluctuated in a wide range between 18600-21250, with a monthly decline of 8.
34%; It is expected that after the completion of the bottom building behavior of Shanghai aluminum in early July, there may be room for a slight rebound, but considering that the market will still face a quiet period of about two weeks before the interest rate meeting on July 26, the overall market sentiment weakened under the expectation of a 75 basis point interest rate hike, or suppressed the Shanghai aluminum plate again, so the main tone of aluminum prices in July may still be weak, or mainly in the range of 1.
8-19,600
.