On December 26, 2023, the average market price of aluminum ingots in East China was 19,216.67 yuan/ton, an increase of 4.51% from the aluminum price of 18,386.67 yuan/ton on December 11.

*Data from www.100PPI.com

From a long-term perspective, the price is currently in a sideways fluctuation range after falling back from highs. It has been fluctuating sideways below 19,000 yuan/ton since May, and exceeded 19,000 yuan/ton at the end of August. In September, the aluminum price first fell and then rose. In October, the aluminum price dropped back to 19,000 yuan/ton and fluctuated around. In November, the aluminum price was weak. After mid-December, it began to pick up, returning to the 19,000 yuan/ton line.

*Data from China Hongqiao Group Limited

Production cuts in the southwest and supply tightening are expected to increase month-on-month in December

In the early stage, electrolytic aluminum production in Yunnan was reduced, and the scale is expected to be 1.17 million tons. The recent heavy snowfall in the northwest region affected transportation, and the heavy snowfall affected the power supply of aluminum plants, and social libraries continued to decline sharply.

In terms of new production capacity, the remaining new production capacity of Inner Mongolia Baiyinhua has been completed, but the output of some electrolyzers has not yet reached capacity;

Domestic electrolytic aluminum plants are mainly operating stably. Affected by the heavy snow and cold wave weather, Xinjiang strictly implemented the "2023 Implementation Plan for Emergency Peak Shaving and Flexible Load Adjustment Capacity of Self-Provided Power Plants". Some aluminum plants in the province experienced peak load regulation and load production. situation, but currently has little impact on production.

There is replenishment operation on the demand side

Demand side: There is replenishment operation for downstream demand.

Aluminum profiles: The operating rate of leading aluminum profile companies is around 56%. This is mainly due to factors such as the off-season in industry consumption, and there are few follow-up orders.

Aluminum plate and foil: The average operating rate of aluminum plate and aluminum foil is above 75%.

Aluminum cable: maintain a high operating rate, around 67%.

Obvious inventory low

In terms of social inventory: after destocking began in the second half of July, inventory is at a relatively low level. As of December 25, the social inventory of domestic electrolytic aluminum ingots in mainstream areas was 414,000 tons. Compared with November 30, 149,000 tons were destocked. In terms of year-on-year data, it was at the lowest level in the same period in the past five years.

Alumina cost-driven

The explosion at the fuel depot in the capital of Guinea triggered market concerns about the supply of bauxite. It is reported that Chinese alumina companies are highly dependent on Guinean ore. From January to November, they imported a total of 91.104 million tons of bauxite from Guinea, accounting for 30% of the total imports. 70.2%. In addition, domestically, due to the heavy pollution in the north, the Shandong alumina plant suspended production for ten days. Mine mining supervision and management in Shanxi are relatively strict, and mines in Sanmenxia, Henan have not yet resumed production, resulting in tight ore supply in Shanxi and Henan. Alumina prices are firm.

The favorable cost aspect coupled with explicit inventory reduction is expected to make aluminum prices more likely to fluctuate in the short term.