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Retaliatory aluminum price rebound

Views:0     Author:Site Editor     Publish Time: 2021-06-17      Origin:Site

On the macro front, market concerns about inflation expectations have gradually receded, U.S. bond yields have fallen, and fundamental metals have generally risen. Last week, market trading revolved around "dumping storage". There was no news from Monday to Wednesday. On Thursday, news came from SHMET that the storage will be dumped until the end of 2021. Although the total amount of dumped storage is unknown, it will continue until the end of 2021., then the amount of aluminum dumped storage each month is expected to not exceed 100,000 tons. The impact on the market is limited, resulting in a retaliatory rebound in Shanghai aluminum prices. 

According to the General Administration of Customs of China, China imported 155,600 tons of primary aluminum in April 2021, of which the HS code 76011010 imported 0.0642 tons, and the HS code 76011090 imported 154,976 tons. In April 2021, primary aluminum imports increased by 77.13% month-on-month, and increased by 2019.18% year-on-year.

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According to SMM data, as of 10th June, the domestic social stock of aluminum ingots was 919,000 tons, a month-on-month decrease of 35,000 tons. Yunnan’s production reduction plan led to an increase in the number of ingots, which hit the spot market last Monday and caused inventories to increase, but the impact was basically absorbed.

SHFE aluminum inventory decreased 19,964 tons to 294,135 tons.

LME aluminum inventory decreased by 12,950 tons to 1,663,150 tons last week.

Main logic:

(1) On the supply side: In May 2021, the domestic output was 3.36 million tons, a year-on-year increase of 10.7%, and the import volume in May weakened. The Yunnan area has reduced production by more than 800,000 tons, and at the same time delayed the newly planned production capacity, resulting in an annual output drop of about 500,000 tons.

(2) On the demand side: the ability of small and medium-sized enterprises to accept orders slightly declined, and the overall operating rate slightly weakened.

(3) In terms of inventory: social inventory decreased by 35,000 tons from the previous month to 919,000 tons.

(4) Overall: the dumping storage rumors will finally go further: monthly release to the terminal, although the total amount is unknown, until the end of 2021, the monthly supplementary supply shock will be weakened and the overall impact on the market will be controllable. Shanghai Aluminum returned to a strong de-stocking state, and prices retaliatory rise. Need to pay attention to the Fed's 17th June resolution.

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