Since the beginning of November 2021, aluminum prices have continued to fluctuate at a low level, which is weaker than other non-ferrous metals. However, after entering December 2021, the aluminum price got rid of the narrow range and began to rebound gradually. Recently, Shanghai aluminum futures have oscillated and strengthened on the basis of the 5-day moving average, which is stronger than other varieties in the non-ferrous sector.
In this regard, market participants interviewed by reporters agreed that the rebound in aluminum prices is mainly affected by the production reduction caused by the shortage of the European energy crisis.
Overseas production cut crisis boosts domestic aluminum prices
As of the close on December 31, 2021, the main Shanghai aluminum futures contract closed up 0.54% at 20,380 yuan/ton, which is about 11.37% higher than the low of 18,300 yuan/ton on November 19, 2021.
As for the reason for the recent rebound in aluminum prices, Huatai Futures researchers Chen Sijie and Mu Qianruo said that it is mainly due to the continuous domestic destocking and overseas production reduction news. However, the current resumption of production in some regions, lower costs and weaker demand have put pressure on aluminum prices. In addition, the recent decline in the black series has also dragged down aluminum prices.
“The energy issue in Europe has caused overall nervousness in non-ferrous metals, including many large-scale aluminum production projects. Supply concerns have swept the non-ferrous market, and aluminum prices have gained upward momentum.” Fan Rui, a researcher at Guoyuan Futures, said.
Wang He, a researcher at China Derivatives Futures, basically holds the same view. She believes that the domestic production of electrolytic aluminum in December 2021 will rebound slightly from the previous month, and the supply in 2021 will be lower than previously expected. In addition, the cost of electricity in Europe continued to rise, and concerns about the production limit of electrolytic aluminum intensified, which stimulated the rise in disk prices.
“Recently, the price of natural gas in Europe has continued to rise, and the electrolytic aluminum production capacity in Europe using natural gas is about 2.4 million tons. According to CRU statistics, about 70% of local smelters have not hedged electricity prices. Romanian aluminum smelter (280,000 tons capacity) ) Due to high electricity prices, the shutdown process has begun, and the production will be reduced by 60% in the stage. Therefore, the market has intensified concerns about the follow-up production reduction of aluminum plants. Although the price of natural gas fell sharply due to the news, the energy shortage problem in Europe is unlikely to be substantially improved in the short term, and the external aluminum price is strong. Effectively increase domestic aluminum prices.” Wang He told reporters.
Market outlook may remain volatile
For the market outlook, the market participants who were interviewed agreed that the energy shortage in Europe may not have substantial improvement in the short term, which will continue to cause disturbance to the supply side of electrolytic aluminum. limited.
Chen Sijie and Mu Qianruo analyzed that as the shortage of overseas natural gas supply has eased slightly and energy prices have fallen rapidly, it remains to be seen how overseas aluminum companies will actually reduce production in the long run. Domestically, Yunnan, Inner Mongolia, and Shanxi have successively released production capacity for resumption of production, and it is expected that the output will rebound slightly in January. With the decline in the cost of electricity and raw and auxiliary materials, the current cost of aluminum per ton has dropped to below 18,000 yuan / ton, and the smelting enterprise has returned to profitability. In addition, at the end of the year, the downstream replenishment and rush orders were relatively concentrated, and the operating rate rebounded slightly. However, considering that the holidays are approaching, it is expected that some processing enterprises will stop work in advance for the holidays, and the overall demand will weaken.
Wang He said that in the early stage, the domestic policy warm wind was blowing frequently. The central bank’s RRR cut came as scheduled, and the policy on real estate also tended to pick up, driving some projects that had been restrained from starting construction due to funding constraints. However, winter is the traditional off-season for real estate demand, and with the Spring Festival approaching, construction will be gradually shut down, making the demand for aluminum products likely to gradually weaken. On the whole, the high enthusiasm for downstream stocking has led to a decline in table demand inventory.
“From the perspective of overseas situation, the shortage of natural gas in Europe will not substantially improve in the short term, and aluminum plants are expected to reduce production strongly, which will support aluminum prices. However, the current domestic fundamentals are slightly bearish. First, the price of electrolytic aluminum raw materials continues to fall, and aluminum plants After the profit continues to recover, there is a strong enthusiasm for resumption of production. Secondly, as the Spring Festival holiday is approaching, the consumption is likely to further weaken, so the stockholders also have a strong motivation to ship, and the above factors will put pressure on the disk. , so the market may rise before the Spring Festival, but the space may be limited.” Wang He told reporters.
Fan Rui said that the European energy crisis may be difficult to effectively alleviate in the short term, so supply tension will continue to form a good bottom support for aluminum prices. However, in the short term, the terminal demand at the end of the year and the beginning of the year cannot give aluminum prices more momentum for a surge. Therefore, although the bottom of aluminum prices is stable, the upward range may be limited.