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The autumn and winter production limit of electrolytic aluminum in Shandong and the favorable G20 summit have triggered a rebound in aluminum prices, but they have failed in a relatively short period of time, and aluminum prices have finally been suppressed under the average line and slowly declined
.
The latest spot inventory announced was down 57,000 tons from last week, and the expansion of inventory decline stimulated the rebound
in aluminum prices.
In view of the short macro environment and the gradual opening of the off-season, the view on aluminum prices is still pessimistic
.
Market risk aversion is hard to dissipate
At the G20 summit, the two heads of state agreed not to escalate tariffs, but also set a 90-day negotiation period
.
Trump's emphasis on the start date of the 90-day negotiation period has rattled
markets.
At the same time, the news that the CFO of Chinese technology giant Huawei has been arrested in Canada and may be extradited to the United States has cast a shadow
over the easing of Sino-US trade relations.
The large number of things to talk about and the short negotiation time make the outcome uncertain, which in turn reduces investors' risk appetite
.
The Brexit process is tortuous, the Conservative Party questions the ability of the Prime Minister to move forward with Brexit, the Conservative Party held a vote of no confidence in Prime Minister Theresa May on the 12th, although it passed the no-confidence vote, but the Brexit agreement still faces great resistance in parliament, which is a big test
for the pound.
The Fed's interest rate meeting is about to take place, and although the market has mixed views on the path of US interest rate hikes in 2019, the December rate hike is considered a foregone conclusion
.
Expectations of a Fed rate hike and safe-haven demand triggered by macro uncertainty have made the dollar strong and weighed on
metal prices.
The benefits of production cuts have been digested, and the new investment capacity has attracted attention
In the third quarter, raw material prices were high and aluminum prices weakened, aggravating industry losses
.
In September, the pace of electrolytic aluminum production reduction accelerated, concentrated in Henan
.
The production cuts in November mainly occurred in Gansu and Qinghai
.
In addition, environmental protection production restriction in Shandong involves 471 electrolyzers
.
From January to November, the national output decreased by about 2.
44 million tons
.
Among them, the scale of production reduction in the fourth quarter was about 1.
1 million tons, which means that the supply will be reduced by nearly 300,000 tons in the first quarter of next year, which is reflected in the continuation of the current spot destocking and the decline in the accumulation of spot inventory after the Spring Festival, and it is expected that the spot discount after the holiday will also be reduced
compared with previous years.
However, this does not mean that the decline in aluminum prices has reversed
.
First of all, at the same time as the production reduction occurs, new production capacity is also being released
.
Recently, Shaanxi Meixin's 300,000-ton aluminum-magnesium alloy project was electrified, and Yun Aluminum Heqing project Yixin Aluminum is expected to produce aluminum ingots in January next year, which will weaken the effect
of production reduction in the fourth quarter.
Secondly, because the production capacity of Shandong Province is a profitable production capacity, from the perspective of the production restriction arrangement, the end of January and mid-March are likely to return to the market to add supply
.
Finally, under the action of multiple factors such as new release, closing of the export window, downstream electrolytic aluminum production reduction and the acceleration of traders' dumping, the price of alumina at the raw material end has been lowered from nearly 3200 yuan / ton to 3000 yuan / ton in the past one month, and is still facing further downward pressure
.
Transmission to aluminum prices reduces the losses of aluminum plants, delays the withdrawal of some loss-making electrolytic aluminum, and ultimately still drags down aluminum prices
.
From the perspective of the production of processing enterprises in Foshan, Guangdong, the current operation of enterprises can basically maintain with November, and consumption has not yet broken off the cliff
.
Enterprises reported that it should be the peak season, but the peak season is not busy
.
From the dimension of aluminum rod processing, the cost of aluminum rod processing in Foshan in November increased by 14.
2% compared with October, but fell 8.
8% year-on-year, reflecting the decline
in the processing market this year.
The number of Spring Festival holidays for processing enterprises in good years is 15 days, and the number of days for holidays in bad years is 20-30 days
.
From the visit and inquiry, this year, processing enterprises will give employees more than one month of vacation, and consumption expectations are poor
.
Macro-level, the undercurrent of Sino-US trade relations is surging, the Fed is expected to raise interest rates in December, and there is a lack of news and economic data
to improve market preferences.
In the industry, the reduction of raw material prices has reduced the losses of electrolytic aluminum enterprises, and the withdrawal of loss-making production capacity is difficult to break out
on a large scale.
Time will enter the off-season, aluminum prices continue to come under pressure, pay attention to the support
around 13,000 yuan / ton below.