In the past October, the aluminum price showed a trend of shock and fall. The aluminum price fell below the 18,000 mark again. As of the end of the month, the cumulative decline reached 4.02%. During the month, due to the market outflow from the LME and the rumor that the United States was considering banning Russian metal trading, the aluminum price fell. It once rose to a high point in recent months, and then although the discussion did not materialize, the concern of supply disturbance continued to support the price to remain high. After the fermentation effect of this event, the aluminum price returned to the fundamentals, and the market fell back.
In the context of weak aluminum prices, the performance of the secondary aluminum market in October was also unsatisfactory. In the case of the National Day 7-day increase of more than 500, the decline expanded in the middle and late days, causing all the gains to continue to decline, especially aluminum alloys and aluminum alloys. Scrap aluminum such as wire and wire has changed from an increase at the beginning of the month to a cumulative decline of nearly 500 yuan at the end of the month. The market supply is still serious, and the profit of manufacturers has narrowed. However, under the demand of “Silver Ten”, the order of enterprises is acceptable, but the profit is compressed again. The details of the secondary aluminum market research conducted by Fubao Nonferrous Aluminum Research Group in October are as follows:
East China Market
Survey on the situation of enterprises in East China: The downstream orders of aluminum plants improved in October, but the profits were still relatively low.
Jiangsu Enterprise A: Maintained normal production in October, with many basic old customers, stable purchases, sufficient downstream orders, and narrowed profits. It was not affected by the epidemic in October and remained basically stable.
Jiangsu Enterprise B: In October, due to the shortage of supply, the purchase was not as good as last month, and the decline was about 30%. It was mainly due to the shortage of supply. It was difficult to replenish the inventory. main problem.
Shandong Enterprise A: The production line basically stopped for more than half in October. The waste trade is the main business, and the processing is at a loss. The production capacity of aluminum bars is about 800 tons, and the scrap purchase is about 1,400 tons. Tons, you can take it as you use it, and may reduce production by the end of the year, wait and
See The Market.
Anhui Enterprise A: Production in October was basically normal. The production capacity of alloy ingots released from production capacity was about 3,400 tons. The material type of scrap procurement was adjusted, and the wheel hubs were fewer. About 3,600 tons and there are still 500 tons in stock, ready for the New Year with low stock.
Anhui Company B: In October, the receipt of scrap aluminum remained basically stable, about 3,500 tons. Although the closed-loop management of the epidemic occurred for a few days during the period, the impact was not significant. The work started normally, and downstream orders were OK.
Jiangxi Enterprise A: The purchase volume in October basically returned to normal, at around 3,500 tons, an increase of 40% from September. In September, it was mainly affected by the epidemic for a period of time; The production line of aluminum rods is planned to be put into operation in two months.
East China spot market: In October, the price difference of scrap aluminum was still obvious, and aluminum wire and aluminum alloy fell by about 500 yuan.
In terms of scrap aluminum prices: during the National Day in October, the price of scrap aluminum rose sharply, and some aluminum plants once rose by more than 500 yuan/ton. After the holiday, the price of scrap aluminum fluctuated and declined, and continued to decline after receding all the increases. As of the end of October, aluminum alloys in East China The mainstream of spraying used materials is around 13,500 yuan, cans around 12,500, and machine aluminum around 14,100. Among them, the prices of cans and raw aluminum are relatively resistant to decline, falling mostly by 100-200 yuan compared with the end of September, but the prices of aluminum alloy materials and aluminum wires have fallen more significantly. The range is 400-500 yuan. Entering November, the market has recovered to some extent, basically recovering most of the decline in October; as of November 7, the mainstream of aluminum alloy spraying used materials in East China is around 14,100, the cans are around 12,900, and the machined aluminum is around 14,300.
In terms of scrap aluminum raw materials: the overall scrap in East China market was still tight in October. Especially after the National Day, the market supply was intensified. Manufacturers raised their prices to receive goods, and the transaction prices were high. The enthusiasm for shipments has improved, but due to the epidemic and unstable market conditions this year, the inventory situation of small and medium-sized freight yards is not as good as that of the same period in previous years, and the overall tight supply of goods in
The Market is Difficult to Improve.
In terms of scrap aluminum inventory: the inventory of aluminum alloy ingot enterprises in East China in October was slightly better than that in September. The downstream orders for aluminum alloy ingots were relatively abundant, the demand for raw materials was acceptable, and the inventory increased slightly. However, due to high prices and market problems, the overall inventory remained Low; due to the impact of the epidemic in the late Shandong region, Linyi Metal City was under control, which had a greater impact on the surrounding market. Enterprises generally reported that the supply of goods in the local market was reduced.
In terms of recycled aluminum alloys, the overall price of recycled aluminum alloy ingots in October showed a downward trend. As of the end of October, the price of ADC12 aluminum alloy ingots in East China was around 18,400 yuan/ton, down 300 yuan/ton from the end of September; it is understood that in October The downstream orders of recycled aluminum alloy ingots enterprises are acceptable. Most of the medium and large manufacturers have long orders, and small enterprises have sufficient orders. However, some enterprises have not reached full production due to insufficient replenishment of raw materials. loss.
On the whole, the re-emergence of the epidemic in many places in October has severely affected market transactions. In addition to the reasons for management and control, freight rates have also increased. Linyi in Shandong and Changge in Henan have the most prominent impact; enterprises in Jiangsu, Zhejiang and Shanghai have mostly maintained normal operations, and downstream orders have been Acceptable.
Southwest and South China Markets
Survey on the situation of enterprises in Southwest and South China markets: raw material prices are high, and corporate profits are still mostly declining in October.
Chongqing Enterprise A: Production in October was basically a little better, but profits were still declining, the market was chaotic, and prices fluctuated greatly; and by the end of the year, customers may have plans to further reduce production, because now the industry It’s not easy to do, it depends on whether there is any improvement next year, the production profit is too low, and I don’t really want to take orders.
Chongqing Enterprise C: The company’s profile production volume rebounded significantly in October. Generally speaking, the spot price in October was relatively stable. In addition, new orders from the downstream market are also acceptable. Basically, the production of finished products is relatively stable. However, it will soon enter the off-season. It is estimated that the output should stabilize in the next two months, and the order volume will not be too much.
Guangxi Enterprise A: The company’s output dropped slightly in October. At present, production is basically based on sales, and there are orders in production. The procurement of scrap aluminum has also dropped significantly because the material type purchased has also been reduced a lot, only the use of Some bare aluminum and aluminum scraps can control production costs, and other types of materials are not as good as buying aluminum ingots directly; and there is still a shortage of scrap in the Southwest and South China markets, and the competition is obvious, and the production situation may not be optimistic later this year.
Guangxi Enterprise B: At present, the company has basically used very little scrap for the finished rod, because it is not cost-effective and the cost is not worth it. Most scrap purchases are still used to process alloy ingots, but the profit of alloy ingots is also low, and the market is not good. Customers expect that there will be a possibility of reducing production lines in
Foshan Enterprise B: The output of the factory basically rose steadily in October. For scrap, some of the waste is supplied within the group, and some of it comes from imported materials. At present, the production profit can still maintain a certain profit margin in the factory, and the inventory has been kept. With a volume of more than 1,000 tons, we have a certain confidence in the follow-up orders.
The spot market in Southwest and South China: The price of scrap aluminum fell in October, and the market showed a pattern of weak supply and demand.
In terms of scrap aluminum prices, the overall scrap prices in the southern and southern regions showed a weakening trend in October. In terms of regions, the Chongqing region had the largest decline, and most material types fell by more than 500 yuan. The price has stabilized, and the decline is relatively limited. Among them, the bright line follows the spot ups and downs. At present, the price difference of the latest bright aluminum line in the two southern regions of the bright aluminum line is kept between 1780-1850; A week ago, the price of raw materials was always at a high level, but the spot price did not rise significantly, which led to a further decline in the profit ratio and had to reduce production costs. The continuous addition of new production capacity by aluminum enterprises has also increased the vicious competition in the scrap market in the two southern regions.
From the perspective of cost, the gap between large aluminum enterprises and small and medium-sized enterprises gradually widened in October. On the one hand, it was reflected in cost control, and on the other hand, it was reflected in the stability of order volume; The environment is down, the average smelting cost in the market is rising, and the profit is declining. However, due to the reasons of brand effect, customer viscosity, and advanced equipment, medium and large enterprises can control their production costs more stably and maintain a certain production profit. Had to face the dilemma of loss-making production.
From the perspective of supply and demand, the operating conditions of most recycled aluminum enterprises in October still maintained the situation of weak production and sales in September, and the market supply and demand performance were not good; among them, although Sichuan and Yunnan regions are steadily recovering the lost production capacity in the early stage, many places in Baise and Foshan are Some manufacturers have reduced production, partly due to equipment overhaul, and partly to properly stop losses; based on feedback from many companies, the increase in orders for profiles and die casting in October was significantly lower than the same period in previous years, and the end of the month, the traditional off-season has also led to some downstream companies. Enterprises are reluctant to place too many orders. Generally speaking, it is difficult to change the pattern of weak supply and demand in the market in the short term. However, when the production reduction of enterprises in the two southern regions is further deepened, there may be a situation where supply exceeds demand, and the market supply and demand pattern may be repaired.
In terms of inventory, the concept of stockpiling of recycled aluminum enterprises in the southern and southern regions also showed a certain differentiation phenomenon in October. Most of the alloy ingot and recycled rod manufacturers reduced their internal inventory at the beginning of October, and mainly digested the inventory in the early stage when the price was high, and then prepared Warehouses are determined by production, stocking up on demand and not stockpiling in advance; a small number of companies are expected to maintain a high inventory status due to their stable output of their own production capacity and an increase in orders; Empty sentiment is strong, and most companies will still maintain the idea of ”wet storage for the New Year”.
Based on the analysis of the actual market conditions in South China and Southwest China, the stabilization of spot prices in the early stage has not brought much positive benefits to the production and operation of enterprises. As we said earlier, the phenomenon of “high cost and low profit” has generally existed in the current market. In the smelting enterprises, in addition, as the country attaches more importance to renewable resources, more and more enterprises squeeze into the big cake of recycled aluminum. As far as the Guangxi market is concerned, there will be a number of new alloy ingot enterprises and plate and strip enterprises that will be put into operation during the year. , and the production capacity of enterprises that plan to put into operation next year also exceeds one million tons; under the constant squeeze of market share, the living space of small and medium-sized enterprises is constantly being compressed, vicious competition is inevitable, raising prices and receiving goods have become the norm, and the market raw materials are in short supply, thus This has led to a further increase in the cost of enterprises; it is expected that at the end of the year or the beginning of next year, if the market does not rebound significantly, the market in the southern and southern regions will inevitably face a new round of corporate reshuffle.
Central China Market
Survey on the situation of enterprises in the central China market: Henan aluminum enterprises have been seriously affected by the epidemic, and the construction of the two lakes areas is mostly normal.
Hubei Enterprise A: 50% of the construction started in October, and the purchase volume is about 2,000 tons. The raw materials for scrap aluminum are mainly aluminum alloy scraps, which means that the market supply is acceptable, but the low-cost supply is difficult to find.
Hubei Enterprise B: Production and procurement in October were normal, about 3,000 tons. Aluminum profile manufacturers mainly use aluminum alloy scraps as raw materials, indicating that there are quite a lot of such sources, and the supply and demand within the enterprise are balanced.
Hubei Enterprise C: Normal operation started in October, and the proportion of foreign sources of scrap aluminum raw materials is relatively large.
Henan Enterprise A: The output in October was only about 80,000 tons. Due to the impact of the epidemic closure and control, the surrounding transportation was seriously hindered, and the profit margin dropped by nearly 60% in the entire third quarter.
Henan Enterprise B: Production has not been stopped due to the impact of the epidemic in October, but the impact of cargo transportation is serious. The purchase volume is only about 1,000 tons, and the current stock is not much.
Henan Enterprise C: In October, due to the epidemic, the production was suspended, and the purchase volume dropped significantly, nearly 40%, and the receipt of goods was resumed at the end of the month. However, due to the epidemic control and other reasons in the local and surrounding markets, the receipt of goods was still not smooth, and the market supply was limited. , currently in stock.
Henan Enterprise D: Normal production in October, the purchase volume is more than 7,000 tons, it is a bit difficult to produce aluminum, and the profit margin is small.
Hunan Enterprise A: Started normal operation in October, purchased about 8,000 tons, produced more than 3,000 tons, and had a standing stock of about 2-3,000 tons. Although the local epidemic was closed and controlled, the impact was not great.
Hunan Enterprise B: The purchase of scrap in October was only about 1,000 tons, down by about 1/3 compared with September, and the decline was obvious. The main reason was that there were few goods in the market and it was difficult to replenish the warehouse. The downstream orders were not worried, and the main raw materials could not keep up.
Hunan Enterprise C: Production at full capacity in October, the raw materials for scrap aluminum are kept in stock, and more than 3,000 tons are purchased. The downstream orders are relatively sufficient and stable, but due to the high price of raw materials, the profit is relatively low, and the profit is small but quick turnover.
Central China spot market: orders from aluminum plants in peak season are acceptable, but some cities in Henan and Hebei are affected by the epidemic.
In terms of scrap aluminum prices: in October, the price of scrap aluminum in central China fell by between 300-600 yuan, and only the price of organic aluminum was relatively firm. From the perspective of material type, according to Fubao Nonferrous Metals’ understanding, the proportion of imported goods of machine and aluminum in Hubei and Hunan is still relatively large. Due to the tight supply of domestic goods, on the one hand, due to various reasons such as the epidemic situation and poor demand, scrap and dismantling Insufficient market arrivals and limited scrap output in the market; on the other hand, the demand in the surrounding areas is also large, the market bidding phenomenon is serious, and good goods are hard to find; in terms of regional differences, due to different account periods and types of enterprises in Hubei, alloys The price of profiles has a slight advantage over Hunan and other regions; on the whole, the price of scrap in the Central China market in October fluctuated with the spot, and the decline was relatively obvious at the end of the month.
In terms of inventory: most manufacturers in central China still maintain on-demand purchases, and those in Hubei basically maintain normal production. Individual areas in Henan and Hunan provinces are closed and controlled, and transportation is hindered. There are many production reductions, and the magnitude is also different.
Demand: After entering October, most companies in the central China market have basically returned to normal production, and downstream orders are sufficient; but due to the disruption of the epidemic in the middle of the month, some downstream companies in Henan were forced to stop production, resulting in a decline in orders for recycled aluminum companies; while in Hunan Even if demand is acceptable, the poor profits of smelters also force them to actively reduce production.
On the whole, the supply of scrap aluminum in the central China market is also tight. The downstream demand in the two lakes is acceptable, but the replenishment of raw materials is not smooth, and some companies have reported that they cannot keep up with the production speed; while the epidemic has affected some markets in Henan and Hebei. It is expected that the transaction in the Central China market may weaken in November.
Summary and Outlook
According to Fubao’s statistics, in October 2022, 47 sample recycled aluminum companies purchased a total of 195,100 tons of scrap aluminum, an increase of 3,400 tons from September. It is understood that orders from aluminum plants in October were significantly better than those in September, especially for aluminum Alloy ingot manufacturers have sufficient orders, and their demand for scrap aluminum has increased, and their purchases have improved compared with September.
In terms of output, the output of 42 companies was 253,800 tons, an increase of 6.9% from September; 24 of the 42 recycled aluminum companies produced 174,300 tons of aluminum profiles, nearly 10,000 tons from September; it is understood that although the profile companies The output has increased slightly, due to the high price of raw materials, companies generally report low profits, and some companies even report that the recovered scrap aluminum is not as profitable as direct trade.
In terms of inventory, 32 sample recycled aluminum enterprises have inventory of 25,000 tons, the overall performance was basically stable. Considering that some aluminum companies in Henan had a decline in inventory due to the epidemic, the inventory of aluminum companies in other regions was mostly in a state of accumulation.
On the whole, the orders of recycled aluminum enterprises in October were acceptable, and some enterprises were producing at full capacity. However, due to the cost of raw materials, the profits of enterprises were low; , the transaction fell.
At present, the pressure of rising aluminum prices still exists, and we believe that even though there are signs of moderate price recovery in the near future, the overall downward trend of aluminum prices has not changed. There is a certain chance of oversold rebound, but in the long run, the cost support point will also move down, superimposed on the weakening of market consumption expectations in the off-season, the risk of the price breaking below 17,000 before the end of the year, which is why we recommend that companies keep more wet storage. one of the reasons.
After entering November, the market has entered a traditional off-season, and the increase in domestic infrastructure investment is limited. The support of the supply and demand side for aluminum prices will become increasingly weak. In the long-term trend, aluminum prices will inevitably show a downward curve, but in the short term, consider increasing the price of aluminum. The concentrated release of overseas negative interest rates. It is expected that after the technical bottoming and rebound stage of Shanghai Aluminum, there will still be a wave of sentiment and the recovery brought by capital promotion. The upper high point is temporarily referred to as 18,600; 1.7-1.86 million, it is recommended to reduce holdings as much as possible on rallies.
In terms of the secondary aluminum market, the traditional consumption off-season is coming, and under the influence of the epidemic and the market situation, it is expected that the secondary aluminum market will not improve in November. In addition, it is understood that some aluminum rod manufacturers in Shandong, Guangdong, and other places have plans to reduce production due to profit and other problems. Though, there is a risk of a further decline in transactions.