August 2021 cable raw materials (aluminum) monthly report

First, the fundamentals

1.
On August 27, the National Development and Reform Commission issued the Notice on Improving the Tiered Electricity Price Policy for the Electrolytic Aluminum Industry, deploying various localities to improve the tiered electricity price policy for the electrolytic aluminum industry, further improve the green price mechanism, and promote the electrolytic aluminum industry to continuously improve energy efficiency and reduce carbon emission intensity
.

2.
The Notice on Improving the Tiered Electricity Price Policy for the Electrolytic Aluminum Industry, requiring aluminum enterprises with captive power plants to strengthen the collection of electricity fees at higher prices; It is strictly forbidden to implement preferential electricity prices
for the electrolytic aluminum industry in various places.
Some enterprises' preferential electricity prices are at risk of increase, but there are no specific policy details
.

3.
According to the latest data from the China Nonferrous Metals Industry Association, China's recycled aluminum output in 2020 was 7.
4 million tons, a year-on-year increase of 2.
1%.

From 2011 to 2020, the cumulative production of recycled aluminum reached 61.
05 million tons.

During the "Thirteenth Five-Year Plan" period, China's recycled aluminum accounted for 20% of aluminum production, compared with more than 80% in the United States, close to 100% in Japan, and more than 30% in the global average, there is still considerable room for future growth
.
According to preliminary forecasts, China's recycled aluminum production will reach 12 million tons and 18 million tons
in 2030 respectively.

4.
In order to do a good job in ensuring supply and price stabilization in the electrolytic aluminum industry and preventing malicious speculation and irrational sharp rise in aluminum prices, the China Nonferrous Metals Industry Association held a video conference
for backbone electrolytic aluminum enterprises on the afternoon of August 30, 2021.
Resolutely implement the requirements of the Political Bureau meeting of the CPC Central Committee on July 30, do a good job in ensuring the supply and price of bulk commodities, and prevent malicious speculation and irrational sharp rises
in aluminum prices.
The third quarter entered the traditional consumption off-season, the demand in key areas such as construction, transportation, and electricity was generally stable, and there was no obvious shortage of market supply and demand, and enterprises would continue to ensure supply and stabilize market expectations
.
Although the cost of production factors and environmental protection has increased, enterprises will strive to cope with the rising cost pressure
by improving the level of resource and energy utilization and strengthening the efficiency of production management.

5.
The National Development and Reform Commission released the operation of the non-ferrous metals industry in the first half of
the year.
In the first half of the year, the output of ten non-ferrous metals in the country was 32.
55 million tons, an increase of 11% year-on-year, and the growth rate increased by 8.
1 percentage points
year-on-year.
Among them, the output of electrolytic aluminum was 19.
64 million tons, an increase of 10.
1%, an increase of 8.
4 percentage points
.

6.
The state decided to start releasing the third batch of national reserve aluminum in 2021 in the near future, and the third batch of 70,000 tons will be put into stock, and the bidding time is September 1
.
Judging from the information released by the third batch of dumping reserves, the amount was slightly less than expected, 20,000 tons
less than the second batch.
At present, the supply side is constantly disrupting, and consumption savings are expected
to improve.

Second, the market review

In August, under the strong action of macro atmosphere and fundamentals, it continued to fluctuate at a high level, and the center of gravity of aluminum prices fluctuated
around the 20,000 mark as a whole.
At the beginning of the month, affected by market risk aversion and storage dumping, aluminum prices fell slightly, and then due to the aggravation of power cuts and production restrictions in many places in China, after hitting a new high in 13 years, aluminum prices continued to impact upward, near the end of the month, storage dumping was not as expected to further stimulate aluminum prices upward
.

On the supply side, the flood disaster in Henan and the epidemic control in Jiangsu and Zhejiang have significantly hindered production and transportation, and many places such as Yunnan, Guangxi and Inner Mongolia have increased power rationing, and most enterprises are facing serious raw material shortages
.
At present, it seems that there are signs of relaxation of power rationing in Henan and Guangxi, and the pressure of dual control in Yunnan hydropower and Inner Mongolia is difficult to ease in the short term; On the 26th, Changji Prefecture, Xinjiang, issued documents for the excess production of five local electrolytic aluminum enterprises, and the total annual production capacity of many places is about 2.
45 million tons
.

On the demand side, this year's off-season consumption far exceeded market expectations, and the cyclical performance of the traditional off-season was not significant
.
Under the blessing of carbon neutrality and new energy dual-material concepts, the market continues to be filled with a favorable atmosphere about aluminum consumption, and the operating rate of most enterprises shows a certain rigidity, especially in the aluminum profile and aluminum plate and foil part
.
In late August, after Shanghai aluminum and spot market prices both updated a 13-year high, the cost pressure of domestic aluminum downstream processing enterprises increased, and consumption was obviously restrained, especially the current aluminum alloy enterprises are facing the cost pressure of rising primary aluminum and silicon prices, and processing fees are difficult to improve, and profits shrink significantly
.

In terms of news, the recently announced national third batch of storage scale is 70,000 tons, lower than the previous 90,000 tons, also lower than the latest announced production limit scale in Xinjiang (involving an annualized production capacity of about 350,000 tons, output of about 130,000 tons), it is expected that this dumping failed to alleviate the tight supply pressure as expected by the market, and according to the past situation, it will rekindle market confidence in the short term and become a major booster of aluminum prices
.
Coupled with the approaching cycle of gold nine silver ten, aluminum prices may continue to hit new highs
with a strong shock trend.

3.
Inventory

In terms of inventory, as of August 26, domestic electrolytic aluminum social stocks: 73,000 tons in Shanghai, 24.
5 tons in Wuxi, 201,000 tons in the South China Sea, 83,000 tons in Hangzhou, 69,000 tons in Gongyi, 65,000 tons in Tianjin, 4,000 tons in Chongqing, 13,000 tons in Linyi, a total of 753,000 tons of aluminum ingots in the place of consumption, and 1.
2 tons
of weekly accumulation.
As of August 27, the total aluminum position of the previous period was 622337 lots, an increase of 94619 lots over the previous month's 527718, and the aluminum price fluctuation this month was strong, and the total aluminum position increased significantly, mainly long positions
.

This year's inventory continues to be at a low water level and the inflection point of accumulation has not been seen, giving strong support
to the off-season cycle of aluminum prices.
This month's overall inventory destocked 05,000 tons, the current inventory level is 753,000 tons, in the past two weeks there has been a small accumulation of the situation, due to the early logistics blockage Gongyi area has a concentrated arrival situation, Wuxi, South China Sea inventory continued to decline, the current overall consumption is still resilient, can not determine the inventory inflection point has appeared, need to pay attention to the subsequent changes
of the social treasury.

Fourth, the waste market

At the end of the month, scrap aluminum rose sharply, the range was mostly 200-400 yuan, of which the rise of raw aluminum was more prominent, and some manufacturers of raw aluminum rose by more than 500 yuan / ton
.
The mainstream price of aluminum alloy spraying old materials in East China is around 15,500, broken bridge material around 14,300, cans around 13,600, and first-class raw aluminum prices around 15,100, all of which are significantly higher than before
.

In terms of the market, the price of goods holders is firm, and the market circulation is small; The price of aluminum alloy ingots has risen significantly, and the price of ADC12 of some manufacturers has risen to more than 20,000, and the inventory is tight; It is understood that in addition to the high price of raw material scrap aluminum to the pressure brought to the recycled aluminum plant, the price of other auxiliary materials soars to the pressure of the aluminum plant, the cost increase is obvious
, the most eye-catching is silicon metal.
The upward revision of silicon metal is also the main reason for
the price divergence between raw aluminum and cooked aluminum.

At present, the market bullish atmosphere is strong, and the supply of goods is tight, it is expected that scrap aluminum will still rise
.
However, the price rises too fast, beware of the risk
of a rush back down.

5.
Market outlook

In August, aluminum prices hit new highs under the mixture of favorable factors, and the margin of aluminum supply and demand in the off-season was tightened, and the marginal reduction of supply caused by production restrictions became the main logic
.
At present, the supply side is still expected to be tight, and the aggravation of restrictions has kept aluminum prices high, and the subsequent situation of expanding the scale of production restrictions and weakening slightly
.
The short-term consumption performance is stable and weak, the downstream fear of heights is strong, on-demand procurement is the mainstay, the inventory has increased slightly, and the probability of short-term aluminum price fluctuations is large
.