In September, Shanghai Aluminum broke the seasonal rise formula and gave up its July upside. In view of the fact that the European debt crisis has not yet formed an effective solution, the possibility of a secondary recession in the European and American economies has increased, and aluminum prices in the future are still in a bearish macro environment. The central release of electrolytic aluminum production capacity in the western region in the fourth quarter will lead to a mid-term aluminum price gap.
The debt crisis in Europe is currently no effective solution to contain the crisis. The debt issue will continue to exert pressure on the market. European Commissioner Almunia said that in view of the deepening debt crisis, more banks may need to recapitalize.
Fitch Ratings said yesterday that as the debt crisis continues to deteriorate, the credit ratings of European countries and the banking industry continue to decline, and these gradually accumulated risks will be reflected in Fitch's future ratings. Portuguese Prime Minister Coelho said that if Greece defaults on its debt, Portugal is likely to need the second round of aid from the European Union and the International Monetary Fund.
The shortage of funds in the market and tight funds led to the light spot of aluminum spot market during the peak season. As of the week of September 16th, the holders actively cleared their shipments and refused to pay a small premium. Aluminum prices quickly fell from 17,800 yuan/ton mark to 17,650 yuan/ton, and fell below 17,700 yuan for the first time since August 9. Ton line, premiums and discounts have also been reduced from nearby flats to premiums of RMB 50/t. Under the pressure of tight downstream funds, the downstream consumption remained sluggish in the first half of September. Buying was not boosted by falling prices, and the characteristics of oversupply were obvious.
Supply tilting towards surplus In spite of the expansion of the power gap in the South China Power Grid, Guangxi and Guizhou power cuts have affected production capacity of electrolytic aluminum, but the expansion of production capacity in the west is sufficient to compensate for the affected production capacity in the southwest. Since the elasticity of supply is small and the demand elasticity is large, according to the IS-LM model, the pressure caused by the price drop due to the sluggish demand is stronger than the price increase caused by the decrease in supply.
Since the second quarter, the electrolytic aluminum supply has become increasingly tight. However, at the end of the third quarter and the fourth quarter, the supply and demand side of electrolytic aluminum has been gradually tilted toward surplus. According to statistics, there are currently 23 electrolytic aluminium projects being launched in China, with a total capacity of more than 7.7 million tons, which is mainly concentrated in provinces such as Qinghai, Xinjiang and Inner Mongolia that have low electricity costs. Among them, Eastern Hope and Shenhuo Coal & Power’s initial production capacity of 200,000 tons is expected to be put into operation in the fourth quarter of this year; Shandong Xinfa invests RMB 10 billion in Xinjiang to build alumina, electrolytic aluminum and downstream processing projects, with an initial production capacity of 175,000 tons to be put into operation during the year. Shaanxi Nonferrous Metals' production capacity of 650,000 tons aluminum-magnesium alloy project in Yulin has been completed, and it can actually put into production 150,000 tons within the year.
Further sluggish consumption slowed down as supply continued to improve, while downstream demand did not flourish during the peak season. Aluminum is mainly used in the housing construction sector. In August, aluminum production increased by 28.22% year-on-year, while the increase in July was 30.14%, and the growth rate continued to slow down. Real estate investment slowed down significantly in August. Despite the increase in affordable housing investment and start-ups, it was difficult to make up for the downturn in commercial housing investment and start-ups. The real estate investment completed in January-August increased by 33.2% year-on-year, 0.8% lower than that in January-July. From January to August, the area of ​​new housing starts rose by 25.8% year-on-year, well below the 66.1% recorded in the same period of last year. In August, the area of ​​newly-built houses was 167.12 million square meters, which was 28% lower than the peak period in June.
Another area of ​​consumption of aluminum alloy automotive industry, slightly warmer in August, but in the newly adjusted energy-saving subsidy policy, the average fuel consumption threshold of auto hundredth-kilometre products increased from 6.9 liters to 6.3 liters, and the range of favored models was reduced. This means that the peak season of automobile production in September may not perform well.
In short, under the domestic monetary policy tightening and “internal pressure and external risks†of foreign debt “riskâ€, the investment and consumer demand of non-ferrous metals are under pressure. The downstream consumption of the aluminum market is not booming, and the dollar has entered a staged strong rebound channel. In terms of pricing pressure on aluminum prices, Shanghai aluminum will turn into a short-term atmosphere in the fourth quarter, 17300-17500 yuan / ton will become the largest resistance area, which is the best entry point for rallies short selling.
The debt crisis in Europe is currently no effective solution to contain the crisis. The debt issue will continue to exert pressure on the market. European Commissioner Almunia said that in view of the deepening debt crisis, more banks may need to recapitalize.
Fitch Ratings said yesterday that as the debt crisis continues to deteriorate, the credit ratings of European countries and the banking industry continue to decline, and these gradually accumulated risks will be reflected in Fitch's future ratings. Portuguese Prime Minister Coelho said that if Greece defaults on its debt, Portugal is likely to need the second round of aid from the European Union and the International Monetary Fund.
The shortage of funds in the market and tight funds led to the light spot of aluminum spot market during the peak season. As of the week of September 16th, the holders actively cleared their shipments and refused to pay a small premium. Aluminum prices quickly fell from 17,800 yuan/ton mark to 17,650 yuan/ton, and fell below 17,700 yuan for the first time since August 9. Ton line, premiums and discounts have also been reduced from nearby flats to premiums of RMB 50/t. Under the pressure of tight downstream funds, the downstream consumption remained sluggish in the first half of September. Buying was not boosted by falling prices, and the characteristics of oversupply were obvious.
Supply tilting towards surplus In spite of the expansion of the power gap in the South China Power Grid, Guangxi and Guizhou power cuts have affected production capacity of electrolytic aluminum, but the expansion of production capacity in the west is sufficient to compensate for the affected production capacity in the southwest. Since the elasticity of supply is small and the demand elasticity is large, according to the IS-LM model, the pressure caused by the price drop due to the sluggish demand is stronger than the price increase caused by the decrease in supply.
Since the second quarter, the electrolytic aluminum supply has become increasingly tight. However, at the end of the third quarter and the fourth quarter, the supply and demand side of electrolytic aluminum has been gradually tilted toward surplus. According to statistics, there are currently 23 electrolytic aluminium projects being launched in China, with a total capacity of more than 7.7 million tons, which is mainly concentrated in provinces such as Qinghai, Xinjiang and Inner Mongolia that have low electricity costs. Among them, Eastern Hope and Shenhuo Coal & Power’s initial production capacity of 200,000 tons is expected to be put into operation in the fourth quarter of this year; Shandong Xinfa invests RMB 10 billion in Xinjiang to build alumina, electrolytic aluminum and downstream processing projects, with an initial production capacity of 175,000 tons to be put into operation during the year. Shaanxi Nonferrous Metals' production capacity of 650,000 tons aluminum-magnesium alloy project in Yulin has been completed, and it can actually put into production 150,000 tons within the year.
Further sluggish consumption slowed down as supply continued to improve, while downstream demand did not flourish during the peak season. Aluminum is mainly used in the housing construction sector. In August, aluminum production increased by 28.22% year-on-year, while the increase in July was 30.14%, and the growth rate continued to slow down. Real estate investment slowed down significantly in August. Despite the increase in affordable housing investment and start-ups, it was difficult to make up for the downturn in commercial housing investment and start-ups. The real estate investment completed in January-August increased by 33.2% year-on-year, 0.8% lower than that in January-July. From January to August, the area of ​​new housing starts rose by 25.8% year-on-year, well below the 66.1% recorded in the same period of last year. In August, the area of ​​newly-built houses was 167.12 million square meters, which was 28% lower than the peak period in June.
Another area of ​​consumption of aluminum alloy automotive industry, slightly warmer in August, but in the newly adjusted energy-saving subsidy policy, the average fuel consumption threshold of auto hundredth-kilometre products increased from 6.9 liters to 6.3 liters, and the range of favored models was reduced. This means that the peak season of automobile production in September may not perform well.
In short, under the domestic monetary policy tightening and “internal pressure and external risks†of foreign debt “riskâ€, the investment and consumer demand of non-ferrous metals are under pressure. The downstream consumption of the aluminum market is not booming, and the dollar has entered a staged strong rebound channel. In terms of pricing pressure on aluminum prices, Shanghai aluminum will turn into a short-term atmosphere in the fourth quarter, 17300-17500 yuan / ton will become the largest resistance area, which is the best entry point for rallies short selling.
Sanji Chemical Trade Co., Ltd. , http://www.lysjchemical.com