Aluminum prices are still under pressure in the short term, and the wait-and-see approach is treated

On the macro front, the current is the low point of market sentiment, and it is expected to experience some recovery in economic activity in the later period
.
The Federal Reserve has started the cycle of interest rate hike and balance sheet reduction, and the trend of overseas economic highs has been established, dragging down the overseas demand for electrolytic aluminum, but due to the conflict between Ukraine and Russia, the rise in energy prices has led to an amplification
of the supply gap.
Domestic demand still needs further efforts
from the steady growth policy.
With the expectation of overseas shortfall, the expectation of increasing the export of China's aluminum products in the later period has risen, and the current consumption is gradually recovering, and the demand for aluminum rods, plates, strips and foils has improved
.

On the supply side, China's total primary aluminum production in March reached 3.
3 million tons, an increase of 1.
8% year-on-year, hitting the highest
since May last year.
The main reason is that from March to April, Yunnan, Guangxi and other places have resumed production and new production capacity, and it is expected that there is still room
for growth on the domestic supply side.

On the demand side, the operating rate of domestic aluminum downstream processing leading enterprises last week increased by 1.
3 percentage points month-on-month to 58.
6%, which was still 6% lower than the operating rate before May Day
.
In the future, many automakers in Jiangsu, Zhejiang and Shanghai will gradually resume work, which may stimulate the start of automotive aluminum processing enterprises to pick up
.
At present, the cost pressure of upstream enterprises has eased under the condition of low prices, which will also drive the enthusiasm of
enterprises to produce.

In terms of inventory, as of May 12, 2022, SMM statistics domestic electrolytic aluminum social inventory of 1.
003 million tons, down 30,000 tons week-on-week, and 58,000 tons
year-on-year.
Electrolytic aluminum inventory continued to be in the trend of destocking during the week, shipments were smooth in various places, and traders' enthusiasm for shipments was also high
.
According to the shipment and transaction of the aluminum ingot market, the transaction in South China has gradually weakened, but the current shipment is good; The performance of Henan and East China is acceptable, but there are still sources of goods in transit in Henan in the later period, and it is necessary to pay attention to the arrival of
goods in various places in the later stage.

Overall, the new resumption of production on the domestic supply side is still proceeding steadily, the production increment continues to be released, and the inhibitory effect of the epidemic on downstream consumption still exists, which limits demand under the traditional peak season, but from the performance of the week, the downstream replenishment demand after the price decline is good, orders have improved, coupled with the cost of stability, there is strong support
below the aluminum price.
Considering that the current incremental release of the market supply side is more certain than the demand on the consumer side, aluminum prices are still under pressure in the short term, and it is necessary to pay attention to the degree of improvement of the epidemic and the degree of downstream consumption recovery, and it is recommended to treat
it with a wait-and-see approach in the short term.