Aluminum prices in November will experience a “V” decline

Aluminum prices remained strong in early November, showing a strong performance. Recently, aluminum prices have fallen, and aluminum prices have been fluctuating in November. According to the Commodity Market Analysis System of Shengyi Society, as of November 29, 2024, the average price of aluminum ingots in the East China market in China was 20373.33 yuan/ton, a decrease of 6.20% from the market average price of 21720 yuan/ton on November 8.

In mid to late November, aluminum prices showed a weak downward trend for the following reasons:

1. Downstream is weak in accepting high priced aluminum ingots

After the previous cost push, aluminum prices are currently at a relatively high level for the year. In the overall environment where domestic real estate terminal demand is not optimistic, the downstream has limited tolerance for high prices.

2. There is an expectation of weakening export demand

On November 15, 2024, the Ministry of Finance and the State Administration of Taxation issued a notice on adjusting the export tax rebate policy. Starting from December 1, 2024, all export tax rebates for aluminum products will be cancelled, involving 24 tax codes such as aluminum strips, aluminum foils, aluminum tubes, aluminum tube accessories, and some aluminum bar profiles.

The partial 301 tariff policy of the United States came into effect on September 27th. This includes a 100% tariff on Chinese electric vehicles, a 50% tariff on Chinese solar cells, and a 25% tariff on Chinese steel, aluminum, electric vehicle batteries, and key minerals.

The cancellation of export tax rebates for downstream aluminum products in China and the implementation of some 301 tariff policies in the United States. Prior to this, under the guidance of the new US president and tax increase policies, the overseas landing costs of exported products have been raised from a domestic perspective. The export demand of the aluminum industry chain is expected to weaken.

3. Doubts about the sustainability of cost support

Although the short-term cost support for aluminum ingots remains strong, the sustainability of cost support is questionable. The fundamentals of proximal alumina remain favorable, but it has also been reflected in prices, with even alumina prices exceeding expectations and experiencing excessive increases. Currently, the profit window for alumina exports is gradually closing, and due to high prices, there will be more production capacity in the future, and long-term excess pressure will gradually emerge; The risk of alumina price pullback has increased, and the cost support risk of aluminum ingot prices has intensified.

According to the monitoring of the commodity market analysis system of Shengyi Society, the 1 # tin ingot market in East China fell this month (11.1-11.28), with an average market price of 254660 yuan/ton at the beginning of the month and 236560 yuan/ton at the end of the month, a decrease of 7.11%.

At the beginning of November, tin prices showed a strong oscillation trend under the influence of multiple factors. With the gradual manifestation of supply side pressure and increasing uncertainty on the demand side, tin prices began to fall under pressure in the middle of the month. At the end of the month, tin prices continued to decline due to market sentiment and technical factors.

Macroscopically, as the dust settles on the US presidential election and the recent strong trend of the US dollar puts pressure on metals, tin prices have been impacted.

In the third quarter of 2024, the global import volume of tin concentrate has significantly increased, mainly from countries such as Congo, South America, and Australia. However, the resumption of tin ore production in the Wa State of Myanmar has not yet been confirmed, but the global supply growth trend of tin concentrate is already very evident.

On the refining end, with the completion of maintenance for large domestic refineries, normal operations resumed this month. This has laid the foundation for the recovery of production in Yunnan region. Jiangxi’s smelting enterprises have taken measures such as expanding the procurement channels for waste tin to ensure stable current production. Due to the increasing difficulty of raw materials, the output of smelting enterprises in Anhui and other regions has been affected.

On the demand side, the electronics industry is recovering, and the terminal electronics industry is in an upward cycle. The recovery of the semiconductor industry has driven an increase in overseas tin ingot imports. The demand for new energy in the domestic market remains stable in the household appliance sector, and the photovoltaic and new energy sectors are also showing high momentum. The consumption of new energy vehicles remains strong, which to some extent limits the decline in tin prices.

Overall, although tin prices may be affected by weak adjustments in the short term, the support below tin prices has become stronger and is not expected to continue to decline.

According to the monitoring of the commodity market analysis system of Shengyi Society, the domestic price of LLDPE (7042) was 8475 yuan/ton on November 1st, and the average price was 8721 yuan/ton on November 27th, with a price increase of 2.91% during this period.

According to the monitoring of the commodity market analysis system of Shengyi Society, the domestic price of LDPE (2426H) was 10816 yuan/ton on November 1st, and the average price was 10816 yuan/ton on November 27th, with the quotation remaining unchanged during this period.

According to the monitoring of the commodity market analysis system of Shengyi Society, the domestic price of HDPE (2426H) was 8475 yuan/ton on November 1st, and the average price was 8525 yuan/ton on November 27th, with a price increase of 0.59% during this period.

The overall trend of polyethylene is relatively strong, with linear products continuing to rise. High voltage products showed a significant decline at the beginning of the month, and prices continued to rise thereafter, while low-voltage products saw a slight increase. Factors contributing to the decline in high-pressure products at the beginning of the month: Due to the conversion of some EVA units to LDPE, there is an expected increase in LDPE supply, resulting in a decrease in prices. The maintenance of enterprise equipment is relatively concentrated, and the supply of goods is tight, which is favorable for the polyethylene market. Petrochemical companies have raised their prices, and traders have followed suit with offers. The demand for agricultural film in November has turned weak from the peak season, while downstream demand for essential replenishment remains limited, resulting in limited new orders and average market transactions. In the second half of the month, crude oil fluctuated strongly and rose, while the cost side boosted the polyethylene market. Recently, prices have fallen, and cost support has weakened. Positive domestic policies have been released, and the market sentiment is good, providing support for the polyethylene market.

On November 27th, the Dalian Commodity Exchange polyethylene L2501 contract opened at 8415 yuan and closed at 8401 yuan, up 8 yuan, with a high of 8434 yuan and a low of 8383 yuan, up 0.10%. The trend of polyethylene futures in November fluctuated strongly, providing some support for the spot market.

The maintenance of the polyethylene plant will be concentrated in November, and with the addition of new production capacity and the restart of parking facilities in December, the supply side is expected to increase; The demand for agricultural film is gradually coming to an end in December, and the downstream operating rate is expected to decrease; In addition, downstream suppliers are more resistant to high priced goods, and it is expected that polyethylene will mainly fluctuate weakly in December.

Price trend

According to the bulk ranking data from Shengyi Society, the domestic PC market fluctuated at a low level in late November, with most spot prices of various brands stabilizing slightly and falling slightly. As of November 26th, the mixed benchmark price of Business Society PC is around 15900 yuan/ton, with a price fluctuation of -0.62% compared to early November.

Cause analysis

Supply side: Recently, the overall operating rate of PC in China has slightly decreased, and enterprises have gradually entered maintenance. The industry average operating rate has narrowly fallen from 77% in the middle to around 75%. The weekly production of PC has also fallen from the ultra-high level of over 60000 tons in the medium and long term to below 60000 tons. But the on-site supply of goods is still abundant, and the supply-demand mismatch pattern remains unchanged. Good news on the supply side is difficult to achieve, with high inventory causing manufacturers to be unable to raise prices, and low ex factory pricing resulting in a stalemate. At the same time, there is an expectation of resumption of work in the future, and the market supply side has poor support for PC prices.

In terms of raw materials, it can be seen from the above chart that the horizontal trend of domestic bisphenol A prices continued in late November. In the early stage, some companies conducted maintenance and the upstream phenol cargo was delayed in arriving at the port. Although there were some positive news in terms of supply and cost, the main downstream PC and epoxy resin stocks were average. In addition, the acetone market has stabilized, and overall, there is a long short confrontation in the current bisphenol A market, with a balanced operation. Bisphenol A has limited impact on the cost support of PC.

In terms of demand, the PC consumption pattern has not improved for a long time, and the overall trend continues to be weak in the previous period, with the logic of weak rigid demand procurement in the market. Industry players tend to have a wait-and-see attitude, while downstream factories purchase goods to maintain production. Buyers have strong resistance to high priced goods, and the circulation of goods on site is slow. The overall inventory in China is high, and merchants have increased their price reduction and order placement operations, making it difficult for the demand side to form strong support for PC spot prices.

Future forecast

The PC market trend in late November was generally weak. The upstream bisphenol A market is generally flat, and the support for PC cost side remains basically unchanged. Recently, the load of domestic aggregation plants has continued to decrease slightly, and there will be more restarts than maintenance in the short term, leading to relaxed supply expectations. At the same time, the industry’s inventory is high, and supply pressure remains high. The downstream weak rigid demand stocking pattern has not changed, making it difficult to drive market trends. The price of PC has fallen below the low point of the year, but the profound mismatch between supply and demand cannot be alleviated in the short term. Therefore, Shengyi Society predicts that the PC market may still show signs of fatigue in the future.

According to the Commodity Market Analysis System of Shengyi Society, the domestic polyester staple fiber market has been slightly weak and adjusted recently. As of November 25th, the average price of 1.4D * 38mm in mainstream factories in Jiangsu and Zhejiang was 7226 yuan/ton, a decrease of 0.23% from November 12th.

Prices are mainly driven by costs, and international crude oil prices have shifted upwards due to the escalation of the conflict between a European country and Ukraine, the decline in the US dollar exchange rate, and the shift in the center of gravity of crude oil prices. As of November 21st, the settlement price of the main contract for WTI crude oil futures in the United States was $70.10 per barrel, and the settlement price of the main contract for Brent crude oil futures was $74.23 per barrel.

The domestic PTA market price has stabilized and stopped falling. As of November 22, the average market price in East China was 4832 yuan/ton, an increase of 0.76% from November 18. But PTA has started to accumulate inventory, and according to statistics, the social inventory is around 3.86 million tons. At present, 3 million tons of PTA plants in East China, including 1.5 million tons and 2.5 million tons of PTA plants, 4.5 million tons in South China, and 1.2 million tons in Northwest China, will be restarted and their load will be increased gradually. The current PTA operating rate in China is around 86%, and it will further increase in the future, with ample supply in the spot market.

On the demand side, it is currently the seasonal off-season, and it is difficult for there to be a significant increase in production in the future. Therefore, the demand for polyester staple fibers remains the main demand. Market demand is expected to further weaken. There is generally a lack of confidence in the future market, and most downstream procurement attitudes may still be cautious. In the fabric market, the speed of winter fabric and lining shipments has slowed down, and sporadic orders for spring and summer fabrics have been placed. As the end of the month approaches, there may be a moderate amount of stocking up on dips.

Business analysts believe that due to the ongoing uncertainty in the geopolitical situation in Europe, international crude oil may experience a wide range of fluctuations. The PTA maintenance equipment has been restarted one after another, and the increase in production has strengthened the expectation of loose supply. At the same time, the demand momentum is insufficient after the end of the peak consumption season. Overall, the pressure on supply and demand has increased, and it is expected that the price of polyester staple fiber will mainly decline.