Shanghai aluminum opened at 20955 yuan/ton on the 18th, and then the disk showed a long Yin trend, mainly affected by the drastic adjustment of domestic tax rebate policies. From the technical analysis, the policy adjustment has formed a greater pressure on the Shanghai aluminum plate, and the emergence of the long Yin line also indicates that aluminum prices may be under pressure in the short term.
This policy change directly led to the return of domestic aluminum product export tax rebates from 13% to zero, significantly weakening the price competitiveness of aluminum in the international market. According to statistics, the total exports of aluminum products affected by the cancellation of export tax rebates in the first October of this year reached 5.11 million tons, accounting for 92.5% of the total exports of unforged aluminum and aluminum, which has a wide range of impacts. Affected by this, some aluminum may turn to the domestic market, resulting in a sharp increase in domestic supply pressure. Before the cost transfer to downstream or overseas markets has not been effectively realized, the profit margin of aluminum processing enterprises will face further compression. However, it is worth noting that the policy adjustment does not involve high value-added aluminum products, which to a certain extent or will accelerate the transformation and upgrading of the entire aluminum industry chain to adapt to the new market environment.
At present, electrolytic aluminum is facing a situation where there is support below, but the top is restricted.
As of last week, the immediate cost of electrolytic aluminum has climbed to a high of 20,893.39 yuan/ton, while the spot price remains at 20,640 yuan/ton, which means that the current electrolytic aluminum production faces a loss of 253.39 yuan per ton. However, the profit margin of alumina is considerable, which has exceeded 2000 yuan/ton. In view of the degree of integration of alumina and electrolytic aluminum plants as high as 70%, the flow of profits is more of an internal deployment problem, therefore, from the current price level, electrolytic aluminum enterprises do not have obvious power to reduce production. In addition, Yunnan Province, which had been passive in previous years, did not reduce production after entering the dry season. Due to low coal prices and abundant water this year, Yunnan power plants have sufficient reserves, resulting in this winter, Yunnan aluminum plants did not cut production as planned, and the original production capacity of 1.1 to 1.2 million tons can contribute two more months of output. Coupled with the gradual release of replacement capacity, by 2025, the apparent supply will increase by 400,000 tons, including 200,000 tons of new production capacity and 200,000 tons of resumed production capacity. The supply side as a whole shows a trend of continuous growth. From the downstream demand side, the current aluminum consumption has come out of the traditional "gold nine silver ten" peak season, is in the stage of transition to the Spring Festival off-season. From the perspective of the construction situation, the downstream industry has shown a more obvious trend of differentiation, but the overall performance is still more optimistic. Among them, the characteristics of the traditional off-season consumption is more obvious, while the power cable industry is facing the pressure of the year-end sprint, and the consumption of new energy fields continues to maintain a strong growth momentum. In addition, the export performance of aluminum this year is also quite bright. According to statistics, the cumulative export volume of aluminum in the first 10 months increased by 16.9% year-on-year, which is no less than that of aluminum exports in 2022, and only 4% behind the first 10 months of 2022, plus this growth trend is expected to continue in the future for some time, and there may be centralized delivery of export orders. There is room for further growth. From the perspective of this year, the first 10 months of electrolytic aluminum production was 35.801 million tons, an increase of 3.88%, while the demand was 37.335 million tons, an increase of 7.8%, and then consider the net import of 1.6521 million tons, there is a surplus of 110,000 tons.
But even in this case, inventories still appear to be depleted, and to the near five-year low. As of today, according to the latest data from SMM, the domestic social inventory of aluminum ingots has dropped to 563,000 tons, continuing to show a trend of destocking. Recently, the rebound in aluminum prices has significantly increased the enthusiasm of downstream enterprises to restock, and the activity of spot aluminum market trading has been enhanced. From the year-on-year data, the current domestic aluminum ingot inventory decreased by 101,000 tons compared with the same period last year. But this does not represent an effective easing of inventory pressure. The recent continuous reduction in aluminum ingot inventories is not only driven by the replenishment behavior of downstream enterprises. Due to the tight transport capacity in Xinjiang, the shipment of aluminum ingots has not improved significantly, which directly led to the reduction of the arrival volume and storage volume. Therefore, it is expected that in the coming period of time, the aluminum ingot inventory will continue to maintain the state of decentralization.
At present, the macro environment and fundamentals are showing a double empty pattern. From the macro level, the market sentiment is more pessimistic, and the trend down with gold provides an opportunity for shorting. At the same time, China's cancellation of the aluminum export tax rebate policy has a negative impact on aluminum prices in the short term. However, both factors are temporary and are not expected to have an impact on markets beyond November.
In terms of overseas markets, due to many uncertainties, the closer to the end of the year, the more pessimistic the market expectations for next year's trade prospects. This expectation may lead to the phenomenon of aluminum exports this year (enterprises in order to avoid possible future trade risks, increase exports in advance), and it is necessary to pay close attention to the aluminum export data in November and December. In addition, considering that there are still optimistic policy expectations in China in the fourth quarter, to a certain extent, the aluminum price has provided support, and it can still be distributed before the Spring Festival.
However, it is necessary to be vigilant that after the Spring Festival, with the reduction of the operating rate of the downstream industry and the further implementation of new policies overseas, aluminum can begin to officially empty.
