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The consumption season stimulated the deepening of the short-lived peak season to make the supply of goods in the consumer regions relatively insufficient. The rush of the consumer companies and the conscious reluctance of the aluminum plant were mixed together, resulting in a panic rise in aluminum prices after the National Day holiday. The purchase of retail capital has played a role in fueling the rise, and prices have risen sharply. However, the reluctant sales of aluminum plants have not been able to sustain the upward trend of prices, and they have started to fall after a short period of time. This also shows that the aluminum factory reluctant sellers, and can not change the original trend. At present, it is only during the peak season of consumption that the price still has a short-term support. It also makes the overall supply and demand basically in a dynamic balance and the price is relatively stable. After the peak season of consumption, prices will lose this support and fall back.
Cost support for aluminum prices This round of price increases has another core driving factor: the rise in alumina prices. The increase in Shanghai Aluminum prices this time was first brought about by the domestic aluminum oxide idle capacity in June and July, which led to the increase in port alumina prices from 4,700 yuan/ton to the current 5,500 yuan/ton. This in turn forced Chinalco to also raise its domestic spot alumina price, from the original 4330 yuan / ton to 4660 yuan / ton. All these have contributed to the increase in Shanghai Aluminum's price from the cost.
However, the expected increase in the import volume of alumina in the coming period, the electrolytic aluminum plant's pressure due to power supply restrictions, and the expected pressure from aluminum mills due to high alumina prices will all impact alumina demand in the short term. This will be the hidden pressure on future prices.
Demand for supply restrains aluminum prices from rising in the international market, aluminum supply is in an unprecedented steady growth. Although plans to reduce production of aluminum plants in Europe and the United States due to energy problems have cropped up, more production capacity in developing countries has brought stability in aluminum production. The steady increase in alumina production, as well as the current spot prices, can reflect the stability of aluminum production.
In terms of demand, we must be cautious in the future. The aluminum consumption is greater in the construction industry, and this industry is facing the same problem in the development of various countries, that is, the price rise is too fast to face the pressure of regulation. Asian regions (Korea, China, and Japan) have begun to regulate; the Fed has also emphasized its risks in many meetings. All these indicate that the aluminum consumption will slow down in the coming year. These are the hidden pressures of future aluminum prices.
The inventory shows disadvantages to the aluminum price in the later stage. The various types of aluminum inventories held by Western producers are increasing this year. This will enable Lun Aluminum to face sufficient supply pressure this year, with limited room for short-term price rises and downward pressure.
In the short term, domestic supply also has the expectation of reducing production. After all, the hydropower in some regions has been reduced due to the dry season in winter, which has brought about a limitation on production. The high alumina prices have also caused some alumina companies in the port of purchase to consider reducing production. However, we need to pay attention to the fact that after two months, consumption will also enter the off-season and demand will decline. The decrease in output will not be able to withstand the impact of the reduced demand brought by the off-season.
In summary, the negative factors facing the current market are intertwined, electrolytic aluminum may be reduced in production, alumina prices are adjusted, the quantity of explicit inventory is reduced, and the hidden stocks are increased. This makes our understanding of prices as if they were . However, we believe that the current market's speculation on the peak season and the reluctance of aluminum producers has overdrawn during the peak season and is facing a correctional decline. The future price decline will come from the fall of alumina and the onset of the off-season consumption. For the Shanghai aluminum market, there is still a dominant advantage of short selling. Therefore, during the peak season of consumer spending, prices will be limited, and the market will repeat. However, with the passage of time, the advent of the off-season will allow prices to expand to some extent.
Pulling away the clouds in Shanghai aluminum market
Domestic and foreign aluminum prices have all started to rise sharply since September. This rise is basically matched by fundamentals: the advent of the consumer season has driven prices to start higher. In the past week, Shanghai Aluminum also declined with the price of aluminum, basically trading within the range of, which also caused the market to re-enter chaos. Based on this, the author hopes to analyze the current market situation so as to enable investors to have a certain understanding of their future price trends.