Aluminum prices continue to fall

The sharp drop in aluminum prices is due to the continuous sharp drop in thermal coal and rapidly lowering the long-term cost of electrolytic aluminum. The expected cost collapse is the main reason for the sharp drop in aluminum prices. At the same time, it was also in a very bleak situation before the aluminum price plummet: inventory continued to accumulate, and at the same time, the downstream willingness to obtain goods was extremely poor. Therefore, in the process of the collective plummet of industrial products, electrolytic aluminum has always lacked effective support. As prices continue to fall, the consumption side of electrolytic aluminum has improved, and the willingness of downstream buyers to pick up goods has picked up slightly. However, due to the impact of power curtailment, the decline in raw material prices cannot prompt the start of downstream construction. 

Considering the heating season, the domestic industrial electricity shortage may further intensify, and it is expected that consumption will not significantly improve during the year. The impact of limited power supply on the supply side is also gradually reducing, but the speed and magnitude are temporarily lower than that on the consumer side. In addition, due to stronger offshore fundamentals than domestic ones, the number of imported aluminum ingots declined during the year, which eased domestic supply pressure to a certain extent. At present, the total average cost of electrolytic aluminum in China is about 19,000 yuan, and the adjustment of electricity prices in aluminum plants is far below the rate of decline in coal prices. At the same time, the speed at which aluminum ingots accumulate inventory decreased significantly after the aluminum price callback, and the pressure eased. Therefore, the reasons for the rise in aluminum prices are already relatively sufficient. However, coal prices are currently under the control of the National Development and Reform Commission, and prices are still under downward pressure, so they will continue to drag aluminum prices. In general, aluminum prices will continue to fluctuate and weaken, and only after the coal price volatility decreases can aluminum prices obtain effective support.

According to the General Administration of Customs of China, China's net imports of primary aluminum in September 2021 were 96,000 tons, down 9% from the previous month and 44% year-on-year; from January to September, my country’s cumulative net imports of primary aluminum were 1.12 million tons, an increase of 48% year-on-year. As overseas inventories continue to decline.