December 2019 cable raw materials (aluminum) monthly report

First, the fundamentals

1.
According to data from the National Bureau of Statistics, the output of electrolytic aluminum in November was 2.
9 million tons, an increase of 0.
6% month-on-month and a year-on-year decrease of 3.
2%.

Total output from January to November was 32.
13 million tons, down 0.
6%
year-on-year.
Electrolytic aluminum production increased slightly this month as some large producers were exempted from implementing winter production restrictions
.
However, the negative growth trend since this year still continued year-on-year, mainly due to the withdrawal of backward production capacity last year, the continuous delay in the growth rate of new production in this year, and the reduction of production caused by non-market-oriented factors continued to constrain the total
operating capacity.

2.
According to data from the National Bureau of Statistics, the national alumina output in November 2019 was 5.
671 million tons, down 4.
97% month-on-month and up 9.
7% year-on-year, and the total output from January to November was 66.
49 million tons, up 0.
32%
year-on-year.
Due to the impact of the decline in alumina prices, and the current alumina prices have fallen to the lowest level this year, the loss surface of alumina companies is also expanding, resulting in a reduction
in production.
However, due to mass production in the early stage, the total output in the first 11 months still increased
slightly.

3.
According to data from the General Administration of Customs, China's untiled aluminum and aluminum exports in November 2019 were 452,000 tons, down 15.
7% year-on-year, an increase of 21,000 tons from October, recording the first month-on-month recovery in six months; the cumulative export from January to November was 5.
253 million tons, a year-on-year decrease of 0.
3%.

April, November aluminum exports rebounded month-on-month, there are factors in the decline of Shanghai, but also seasonal effects, but the overall recovery is not large, and with the continuous escalation of trade frictions during the year, and the overall Shanghai aluminum price to maintain a high level of background, the export situation is not optimistic
.
Considering that there is generally a time lag of about one month from order signing to delivery, most of the aluminum orders exported in November are signed in October and before
.
Aluminum exports are expected to remain at current levels in December, with January volumes plummeting
month-on-month.

5.
Data show that China's alumina imports in November were 206,800 tons, down 13.
83% from 240,000 tons in October, and an increase of 3,319.
3% over the same period last year, continuing to increase sharply year-on-year, on the one hand, because of the low base in the same period last year
.
On the other hand, due to the weakness of the outside and the strength of the inside, the factors of the decline in the Shanghai ratio are; From January to November, the cumulative import of alumina was 1.
24 million tons, an increase of 167%
year-on-year.
In terms of exports, alumina exports in November were 10,739 tons, down 96.
2% year-on-year, and cumulative exports from January to November were 238112 tons, down 81.
5%
year-on-year.

6.
Data show that China's scrap aluminum imports in November were 66,000 tons, down 50.
2% year-on-year and 9.
2% month-on-month, continuing to remain low
.
The main reason is that the number of import approvals fell sharply by 85% in the fourth quarter, and under the high profits of imported aluminum scrap, imported scrap approvals have been exhausted, and even some of the previous surplus approvals
have been used.

Second, the market review

At the beginning of this month, boosted by the rise in aluminum in Lun, the main force of Shanghai aluminum approached the 10,400 mark, but the price of alumina continued to fall, and the weak cost side inhibited the rise in aluminum prices.
Shanghai aluminum main force under pressure around 14,000; in the middle and late due to the rain and snow in the north, resulting in a decrease in market arrivals, subject to this speculation, investors are enthusiastic about longing, Shanghai aluminum rose sharply, intraday breakthrough of 14,000 mark, and temporarily supported at this mark, the highest climb to 14285, but the cost continues to decline, and high profits increase new capacity expectations, as the year is approaching, market demand gradually weakens, the total signs do not support the aluminum price rise, the market long and short game, cautious January aluminum price or there is a possibility of falling, Shanghai aluminum main force 14,000 mark can support remains to be seen, operational advice for the time being
。 It is expected that the overall fluctuation range of Shanghai aluminum in January is 13900-14300
.

In terms of the external market, this month Lun aluminum shock rise, at the beginning of the month due to Sino-US trade positive news, Lun aluminum moved up, the highest climbed to 1795 US dollars, and then the United States again raised the tariff stick to trigger a rise in risk aversion, macro expectations are empty, and Lun aluminum inventory increased, Lun aluminum the lowest down to 1735 US dollars, but by the domestic aluminum price sharply boosted, Lun aluminum center of gravity moved up, intraday breakthrough 1800 mark, the highest climb to 1830 US dollars / ton, from the trend point of view, Lun aluminum inventory increased, and the fundamentals did not substantially improve , Lun aluminum has limited upside, above 1800 or pressure remains, short-term temporary attention to whether this threshold can be effectively supported, it is expected that in January Lun aluminum or fell into a weak trend of shock, pay attention to the range of 1750-1850 US dollars
.

In terms of the market, there is not much circulation in the market, and the holders sell at a high price, but as the price continues to rise, middlemen and downstream fear of heights breed, most of them only buy on demand, and some are forced to replenish the warehouse at the end of the year, and buy
a small amount.
Overall trading volume
improved from November.
In East China, aluminum prices rose this month, a slight shock at the beginning of the month, with the arrival of cold air, rain and snow in the north, resulting in a decrease in market arrivals, boosting investors' enthusiasm for long, aluminum prices are slightly stronger
.
In South China, as of December 31, the price of aluminum ingot tickets in South China was between 14890-14990 yuan / ton, up 700 yuan / ton from the end of November, a monthly increase of 5%; The price difference between Guangdong and Shanghai is 410 yuan / ton
.
Due to the high price of the monthly ticket, the holders' willingness to raise the price is strong, which widens the price difference between Guangdong and Shanghai, but downstream processing enterprises are waiting to see and see when receiving goods
.

3.
Inventory

This month, the increase in aluminum inventory was obvious, because it coincided with the Christmas holiday, and the market trading weakened
.
As of December 30, the total inventory of London aluminum was 1477725 tons, an increase of 206075 tons or 16.
2% from the end of November; Inventory growth weighed
on the trend of Lun Aluminum.
As of December 27, the total aluminum inventory of the Shanghai Exchange was 185127 tons, down 60,697 tons, or 24.
69%,
from the end of November.
Domestic social stocks, as of December 30, Shanghai area 110,000 tons, Wuxi area 187,000 tons, Hangzhou area 52,000 tons, Gongyi area 40,000 tons, South China Sea area 127,000 tons, Tianjin 57,000 tons, Linyi 06,000 tons, Chongqing 15,000 tons, consumption of aluminum ingot stocks totaled 594,000 tons, a cumulative decrease of 161,000 tons
this month.

Fourth, the waste market

Aluminum scrap prices remained stable overall in December; At present, the mainstream price of clean machine aluminum in South China is around 10200, and the price of aluminum wire is around 12500; At present, the mainstream receipt price of aluminum alloy spraying old materials in East China is around 10700-10800, aluminum line is around 12200-12300, cans are around 8800, and clean broken bridges are about
9900.

In terms of the market, the market supply is tight, the holders are shipping at high prices, the overall inventory of medium and large freight yards and manufacturers is low, and the receipt of goods is positive
.
Aluminum rod and aluminum profile manufacturers tend to 1, 3, 6 series scraps and aluminum profiles, and some manufacturers receive goods at a higher price due to lack of goods; In addition, it is understood that most manufacturers have been closed, especially in the north, strict environmental protection, now mostly to replenish inventory, the overall market transaction has become weak, 1 series, 6 series, raw aluminum sales are acceptable
.
The year is approaching, most of the market is dominated by the withdrawal of funds, the overall transaction of the market has turned weak, and only some medium and large enterprises are actively replenishing their warehouses to prepare
for the start of construction in the next year.
Scrap aluminum is generally stable
.

5.
Market outlook

After New Year's Day, downstream orders accelerated to cut, downstream receiving capacity weakened to put pressure on spot high premiums, electrolytic aluminum production rebounded, spot inventory inflection point loomed, which will put pressure
on short-term aluminum prices.
If consumption cannot return quickly after the Spring Festival, it is not ruled out that aluminum prices will fall further
.
However, due to the relatively low amount of inventory after accumulation, it constitutes a restraint on bears, which in turn leads to the trend of the aluminum market to appear
after the pace of destocking slows down in the peak season.