As the inventory data is released, it shows that aluminum ingot inventory has fallen, and the trend of Shanghai aluminum is supported, but the US dollar is still at a high level and the continued increase in aluminum inventory has put the aluminum price trend under pressure.
From October 12 to October 20, LME inventory soared by 242,475 tons, an increase of 74.42%. As of October 20, LME aluminum inventory reached 568,275 tons.
Hypermark trader Glencore has delivered a large amount of Russian-made aluminum to a registered warehouse in Gwangyang, South Korea, two people familiar with the matter said on Tuesday. Some people familiar with the matter said that the aluminum shipped to Guangyang is produced by Rusal.
Returning to the domestic aspect, with the release of new production capacity and resumption of production capacity in Sichuan and Inner Mongolia, the total operating capacity of domestic electrolytic aluminum is slowly recovering. However, the dry season in Yunnan is approaching, and we must still pay attention to whether there is a possibility of further production cuts and expansion. The short-term domestic supply pressure is expected to decrease.
Considering the future production capacity changes, it is expected that the domestic electrolytic aluminum operating capacity may be restored to around 40.78 million tons by the end of October, and the output in October may be around 3.46 million tons, with increasing by 9.3% year-on-year.
In October, orders in the automotive and photovoltaic sectors have improved, but the real estate industry is still weak. As aluminum prices fall, downstream stocking sentiment improves. At the same time, the epidemic affects transportation, spot arrivals are slow, spot supply becomes tighter, and aluminum ingot inventory continues to be destocked.
The latest statistics show that as of October 20, the domestic social inventory of electrolytic aluminum was 636,000 tons, and the inventory was reduced by 19,000 tons in the second week after the holiday, a decrease of 321,000 tons compared with the same period last year.
At the same time, the latest aluminum rod inventory data shows that as of October 20, aluminum rod inventory decreased by 25,700 tons compared with last Thursday to 71,900 tons, and inventory continued to decline after the National Day holiday.
Overall, the situation of pressure relief on the supply side will continue in the short term, but the demand side is disturbed by the epidemic, which may affect the start of enterprises. We need to wait for downstream start-up rate data to verify. Overseas LME aluminum inventory continues to grow and the decline in energy prices such as European natural gas has caused pressure from London aluminum. It is expected that the trend of Shanghai aluminum will continue to fluctuate in the fourth quarter.
Author: Feng Yuehong, welcome to exchange industry opinions
