Overall increase in aluminum prices in April

Aluminum prices rose overall in April and slightly declined this week. According to the Commodity Market Analysis System of Business Society, the average price of aluminum ingots in the East China market on April 20, 2024 was 20360 yuan/ton, an increase of 4.14% compared to the average market price of 19550 yuan/ton at the beginning of the month; Compared to last Friday (4.12), the average price of aluminum ingots in the East China market was 20570 yuan/ton, a decrease of 1.02%.

This week, aluminum prices have fluctuated and fallen mainly due to the impact of news sentiment in the early stage (the UK and the US have imposed sanctions on Russian metals, including aluminum, which accounts for a relatively high proportion of LME deliverable inventory, especially copper and aluminum, and there may be some panic in the market). As a result, aluminum prices have strengthened. After the rise of aluminum prices, the market has gradually begun to digest the news, coupled with increased expectations of delayed macro interest rate cuts this week, dragging down the market’s continued upward trend.

Fundamental Overview:

1. Inventory changes

As of April 18th, the social inventory of domestic electrolytic aluminum ingots was 844000 tons, a decrease of 10000 tons compared to the same period last week.

As of April 18th, LME aluminum inventory decreased by 4600 tons compared to the previous trading day and 15400 tons compared to the same period last week.

2. Production data of the industrial chain in the first quarter

According to data from the National Bureau of Statistics, the cumulative production of electrolytic aluminum in China from January to March 2024 was 10.694 million tons, a year-on-year increase of 6.8%. Among them, in March 2024, China’s electrolytic aluminum production reached 3.585 million tons, a year-on-year increase of 7.4%.

Raw material end: From January to March 2024, China’s cumulative production of alumina reached 20.166 million tons, a year-on-year increase of 2.8%. Among them, in March 2024, China’s alumina production reached 6.776 million tons, a year-on-year increase of 0.5%.

Downstream end: From January to March 2024, China’s cumulative aluminum production reached 15.685 million tons, a year-on-year increase of 13.5%. Among them, the aluminum production in March 2024 was 6.03 million tons, a year-on-year increase of 8.4%.

3. Import and export data of the industrial chain in the first quarter

The latest data from the General Administration of Customs shows that from January to March 2024, China exported 1.48 million tons of un forged aluminum and aluminum materials, a year-on-year increase of 7.4%; Among them, in March, China exported 510000 tons of un forged and rolled aluminum and aluminum materials, a year-on-year increase of 3.1%.

In terms of imports, from January to March 2024, China’s cumulative imports of unwrought aluminum and aluminum materials reached 1.1 million tons, an increase of 92.3% year-on-year; In March, the import volume of unwrought aluminum and aluminum materials was 380000 tons, an increase of 89.8% year-on-year.

4. Terminal demand data for the first quarter

According to statistics from the China Association of Automobile Manufacturers, China’s automobile production and sales reached 6.606 million and 6.72 million units respectively from January to March 2024, with year-on-year growth of 6.4% and 10.6%. Among them, the production and sales of automobiles in March reached 2.687 million and 2.694 million respectively, with a month on month increase of 78.4% and 70.2%, and a year-on-year increase of 4% and 9.9%, respectively.

In terms of domestic infrastructure construction investment, from January to March 2023, domestic infrastructure investment increased by 8.75% year-on-year.

In terms of domestic real estate: According to statistics from the National Bureau of Statistics, from January to March 2024, the construction area of Chinese real estate development enterprises was 678.51 million square meters, a year-on-year decrease of 11.1%. Among them, the residential construction area was 47.45.8 million square meters, a decrease of 11.7%. The newly constructed area of housing is 172.83 million square meters, a decrease of 27.8%. Among them, the newly started residential construction area was 125.34 million square meters, a decrease of 28.7%. The completed area of houses is 152.59 million square meters, a decrease of 20.7%. Among them, the completed residential area was 111.48 million square meters, a decrease of 21.9%.

Recent supply and demand variables: Yunnan’s resumption of production

On the supply side: Following the release of 800000 kilowatts of electricity in Yunnan Province in March for the resumption of electrolytic aluminum production, due to the improvement of water levels in mainstream hydropower stations in Yunnan region, an additional 300000 kilowatts of electricity can be used for the resumption of electrolytic aluminum production. It is expected to increase production capacity by 200000 tons and resume production in April; Adding up the previous production capacity of 500000 tons, the Yunnan direction’s production capacity can reach 700000 tons.

Future Market Forecast

The aluminum price is likely to enter a long short stalemate stage, with an increased probability of sideways fluctuations. The long short factors are as follows:

Multiple reasons:

1. Inventory: As of April 18th, the inventory of electrolytic aluminum in the mainstream domestic market was 844000 tons, which is 910000 tons compared to the inventory of electrolytic aluminum in the mainstream domestic market on March 28th, with 66000 tons removed from stock; In the near future, the social inventory of aluminum ingots may enter a state of destocking, which will provide certain support for aluminum prices.

2. The macro trend remains unchanged, and under the expectation of the Federal Reserve’s interest rate cut, the expectation of overseas monetary easing is strengthened. The non-ferrous sector has certain financial attributes, which provides positive support for aluminum prices.

Air Force Reason:

1. Yunnan’s supply will continue to rise in the future. Recently, aluminum companies in Yunnan have resumed production ahead of schedule and have basically been implemented. The external power transmission in Yunnan Province has decreased, and the power supply in the province is abundant. The process of resuming electrolytic aluminum production is underway. There is an expectation of an increase in domestic supply.

2. The import window was temporarily closed in the early stage, and with the rise of domestic aluminum prices, the domestic spot discount situation has improved. The data shows that the year-on-year surge in overseas raw aluminum imports from January to February has had a certain impact on domestic spot prices. However, the United States and the United Kingdom have announced new trading restrictions on Russian aluminum, copper, and nickel, as sanctions will not prohibit non US individuals and entities from purchasing Russian physical copper, nickel, or aluminum. It remains to be seen whether Russian aluminum will gradually enter the domestic market.

On April 18th, the domestic glycerol market prices remained stable. According to the data monitoring system of Business Society, as of April 18th, the benchmark price of glycerol in Business Society was 4500.00 yuan/ton, an increase of 1.41% compared to the beginning of this month (4437.50 yuan/ton).

On the raw material side, multiple bearish factors suppressed the oscillation and decline of the palm oil market. The production of Malay palm oil in the external market is in a recovery period, and the futures price has fallen. The demand for many domestic catering products is sluggish, and the market for substitute soybean oil continues to decline. The bearish sentiment is suppressed, and the palm oil market is constantly falling, falling to 8000 yuan/ton. According to the monitoring of Business Society, on April 18th, the benchmark price of palm oil in Business Society was 8038.00 yuan/ton, a decrease of -2.45% compared to the beginning of this month (8240.00 yuan/ton).

The downstream market for epichlorohydrin is weak, with weak demand.

Post forecast: According to the glycerol data analyst from Business Society, the raw material soybean oil and palm oil market is oscillating and falling, and enterprises are mostly wait-and-see. In addition, the downstream chlorine market is weak and demand is sluggish. In the near future, domestic glycerol prices may remain stable, and more information needs to be paid attention to market guidance.

According to monitoring data from Business Society, as of April 17, 2024, the domestic organic silicon DMC market price reference was 13840 yuan/ton. Compared with April 14 (organic silicon DMC reference was 14500 yuan/ton), the price decreased by 660 yuan/ton, a decrease of 4.55%.

From the data detection chart of the organic silicon DMC products of the Business Society, it can be seen that this week (4.14-4.17), the overall weak and declining domestic organic silicon DMC market, and the focus of organic silicon DMC negotiations continues to decline. At the beginning of the week, the price of organic silicon DMC in Shandong’s major factories remained stable at a low level, with a reference of around 13700 yuan/ton. The organic silicon DMC of leading companies has been adjusted downwards to around 14000 yuan/ton, and the high prices in the early stage of the market have been continuously lowered, resulting in a narrowing of the price difference between high and low organic silicon DMC. During the mid week period, the price of organic silicon DMC from Shandong’s major factories was lowered to around 13500 yuan/ton, and the overall low market price continued to decline. As of April 17th, the domestic market price of organic silicon DMC is based on around 13500-14000 yuan/ton.

Analysis of influencing factors

In terms of demand: Currently, the trading atmosphere on the organic silicon DMC market is light, and downstream demand continues to be weak. The demand side lacks support for the organic silicon DMC market.

On the supply side, although some factories are operating at a reduced rate, due to the slow transmission of supply and demand, there is still pressure on the supply of organic silicon DMC on-site, making it difficult for the supply side to provide effective support to the organic silicon DMC market.

In terms of cost: Recently, although the metal silicon market has stopped falling and stabilized, the overall situation has not improved significantly. Therefore, the support for organic silicon DMC in terms of cost is also average.

Price situation of organic silicon DMC in some regions of China

Region/ Product/ April 17th

Shandong region/ Organic silicon DMC/ 13500-14000 yuan/ton

Zhejiang region/ Organic silicon DMC/ 13500-14000 yuan/ton

Southwest region/ Organic silicon DMC/ Around 14000 yuan/ton

Northwest region/ Organic silicon DMC/ Around 14000 yuan/ton

Hubei region/ Organic silicon DMC/ Around 14000 yuan/ton

Prediction of the future trend of organic silicon DMC market

At present, the atmosphere of new inquiries for organic silicon DMC in the market is average. As the market price of organic silicon DMC drops to a low level, large factories have a strong stabilizing mentality. According to the organic silicon DMC analyst of Business Society, in the short term, the market situation of organic silicon DMC will mostly be weak with slight adjustments. More attention should be paid to the changes in supply and demand information.

Price trend

According to the bulk list data from Business Society, the domestic PC market has been generally stable recently, with spot prices of various brands fluctuating. As of April 16th, the benchmark price for the mixed PC of Shengyishe was around 16200 yuan/ton, with an increase or decrease of+0.41% compared to the beginning of the month.

Cause analysis

In terms of raw materials, it can be seen from the above figure that bisphenol A rebounded at the bottom in early April. Affected by the high level operation of international crude oil, pure benzene phenol bisphenol A shows an upward trend. In addition, due to the shutdown and maintenance of some bisphenol A plants in the early stage, the current industry operating rate is only around 60%, dropping to a new low in six months. Overall, the benefits of bisphenol A mainly come from supply and cost, while the consumption aspect is slightly lighter. In the future, it may be organized and operated, and the support for PC spot goods is still sufficient.

In terms of supply: Recently, the overall operating rate of PC in China has undergone a narrow adjustment, with an industry average operating rate of around 77%. Recently, Zhejiang Petrochemical’s maintenance has gradually resumed, and there is expected to be a slight increase in supply in the future. PC supply side support is average.

In terms of demand: Recently, PC consumption has taken on the previous weak pattern, with the main logic leaning towards maintaining production and digesting inventory for just needs. Downstream enterprises have poor stocking enthusiasm and weak demand. Buyers have some resistance to high priced sources, and the demand side has poor support for spot prices.

Future Market Forecast

Recently, the PC market has remained stable with minor fluctuations. Upstream bisphenol A rose and then fell sideways, providing decent support for PC costs. The load variation of domestic polymerization plants is limited. The consumption on the demand side lags behind, and the trading volume is cold and sparse. It is expected that the PC market in the future will be constrained by weak terminal demand, and prices may stagnate before entering a consolidation market.

Product Name: PVC

Latest price: 5566 yuan/ton

Analysis points: On April 15th, the PVC spot market prices fluctuated. The manufacturer’s quotations tend to be stable, and the on-site trading atmosphere is average. The decline in futures prices has suppressed confidence in the spot market, and dealer prices are more flexible. It is difficult to transact high priced goods. At present, the quotation for PVC SG5 is mostly around 5450-5750 yuan/ton.

It is expected that the PVC spot market will fluctuate in the short term.