January 2021 cable raw materials (aluminum) monthly report

First, the fundamentals

1.
According to the National Bureau of Statistics, China's aluminum production in 2020 was 37.
08 million mt, an annual high, as aluminum mills profited from soaring aluminum prices
.
Although the price rally cooled in December, production also hit a record monthly high
.
Data showed that primary aluminum production in December was 3.
27 million tons, an increase of 2.
8% from 3.
182 million tons in November, and also broke the monthly record
of 3.
2 million tons in October.

2.
Data show that in December 2020, the national alumina output was 6.
134 million tons, a year-on-year increase of 3.
2%.

In 2020, the national output of alumina was 73.
132 million tons, a year-on-year increase of 0.
3%.

The decline in alumina production in December was mainly due to the slight decrease in the roasting volume of northern alumina enterprises due to the heating season policy
.

3.
According to data released by the General Administration of Customs, China's exports of unwrought aluminum and aluminum products in December 2020 were 456,130.
4 tons
.
Annual exports of unwrought aluminium and aluminium in 2020 were 4,857,434.
8 tonnes, down 15.
2%
from 5,726,131.
7 tonnes in 2019.

4.
According to Chinese customs data, China exported 62,000 tons of alumina in December 2020, with a cumulative export of 154,600 tons for the whole year; in December 2020, it imported 408,500 tons, an increase of 0.
40% year-on-year and 63.
77%
month-on-month.
In 2020, the cumulative import volume was 3.
8059 million tons, an increase of 131.
32%
year-on-year.

5.
According to the latest report released by the World Bureau of Metal Statistics (WBMS), the global primary aluminum market was oversupplied by 2.
081 million tons from January to November 2020, and 448,000 tons in 2019
.
From January to November, the demand for primary aluminum was 59.
11 million tons, down 583,000 tons from the same period in 2019
.
From January to November, primary aluminum production increased by 2%.

Total reported inventories decreased in November and ended November by 100,000 tonnes
below December 2019 levels.

6.
China's two major aluminum producers jointly issued proposals on how the aluminum industry should seek to reduce emissions, save energy and produce low-carbon metals as part of
the national plan to achieve carbon neutrality.
The proposal calls for increased investment in technology to reduce emissions and improve energy savings; More use of clean energy such as hydropower, wind and solar, and more aluminum recycling
.
Both Chinalco and Weiqiao use hydropower to produce aluminum
in Yunnan province.
The proposal also calls for strict capacity and output controls
.
The industry should ensure that the production capacity of primary aluminium and alumina peaks
during the 14th Five-Year Plan (2021-2025).
China is the world's largest producer of aluminum, using energy-intensive smelting processes
.
China's leaders recently pledged to peak carbon emissions by 2030 and achieve carbon neutrality
by 2060.

Second, the market review

This month's aluminum price external strong internal weak trend is more obvious, since a wave of rebound in December, the main force of Shanghai aluminum continued to decline in January, the overall fluctuation range of 14600-15500, down 3.
25%
month-on-month.
Under the seasonal weakening of consumption, domestic social inventories are also continuing to accumulate, aluminum prices are under more obvious pressure, in addition, the frequent fluctuations of the epidemic in Hebei have also aggravated market pessimism, but boosted by macro expectations, the decline in aluminum prices has slowed down
.

In terms of the market, the market at the beginning of the month is more normal trading, but in mid-to-late January, with the approach of the Spring Festival, the holiday of downstream enterprises gradually increased, and compared with previous years, the holiday was more early, the market demand weakened more obviously, and the electrolytic aluminum inventory entered the accumulation stage in advance; Traders' enthusiasm to enter the market has also decreased, and market transactions have declined significantly, and it is expected that trading will be difficult to improve in February due to the Spring Festival
.

East China: The domestic epidemic is repeated, confirmed cases have appeared again in many places, market worries have risen again, coupled with the accumulation of electrolytic aluminum inventory in January, making the trend of aluminum prices under pressure, the center of gravity of spot aluminum prices in East China in January has shifted down significantly, the overall operating range is 14680-15750 yuan / ton, as of the end of January, the price is between 14950-14990 yuan / ton, down 740 yuan / ton from the end of December, down 4.
71%.

South China: Foshan aluminum ingot prices continued to decline in January, and by the end of January, the price of aluminum ingots with tickets was between 15140-15240 yuan / ton, down 880 yuan / ton from the end of December, down 5.
5%, and the decline was wider
than that in East China.
In terms of market transactions, the transaction in the South China market in mid-to-early January was mostly reflected in the inventory of enterprises, but then due to the Spring Festival factor, downstream aluminum profile enterprises were on holiday, and the transaction volume decreased
.

3.
Inventory

As of the end of January, LME aluminum inventory was 1428225 tons, an increase of 82,425 tons, or 6.
12%, compared with the end of December, LME aluminum inventory showed a growth trend in January, and the magnitude was more obvious, making the trend of LME aluminum under pressure, failed to hold the 2000 mark, short-term still pay attention to the pressure
of the mark.
In January, the domestic Shanghai aluminum inventory showed an upward trend, especially at the beginning of the month, the increase was more obvious, increasing by more than 10,000 tons in a tight week, as of January 22, the Shanghai aluminum inventory was 236282 tons, an increase of 12,047 tons compared with the end of December, an increase of 5.
37%.

Fourth, the waste market

At present, the mainstream price of 6063 old materials in South China is around 11300, clean machine aluminum around 11750, aluminum wire around 12800, all of which fell sharply from December
.
East China also has a decline of about 500 yuan, but the variety difference is more obvious, door and window materials, aluminum wire fell greatly, machine aluminum relatively resisted, only down 200-300 yuan, the current local paint material about 11,000, aluminum wire around 13,000, clean machine aluminum around 11,700, cans around
10,300.

In terms of the market, the price of scrap aluminum fell in January, and there were many normal transactions in the middle and early months, due to concerns about the epidemic after the holiday, there were not many stockpiling merchants, and in the middle and late months affected by the market, the epidemic and the Spring Festival factors, scrap aluminum freight yards were mostly concentrated in the second half of the holiday, and the current general holiday has been completed, and the market supply has decreased significantly; In addition, it is understood that at present, manufacturers are also concentrated at the end of the month holiday, and a small number of enterprises do not stop work
during the Spring Festival.

February because of the Spring Festival, trading days reduced, yards and manufacturers holiday, the market or gradually presented a priceless situation, need to pay attention to the accumulation of electrolytic aluminum after the holiday and macro guidance, it is expected that February scrap aluminum rise and fall space is not much
.

5.
Market outlook

Real estate, automobiles, and power in the terminal areas with a large proportion of aluminum terminal demand performed well, and the main logic of inventory maintenance and destocking is expected to continue to support aluminum prices to remain firm
.
Short-term aluminum prices have signs of stabilizing at the bottom, but due to the uncertainty of the epidemic, market demand may shrink to a certain extent, and February is about to usher in the traditional Spring Festival holiday, the later demand gradually weakened, aluminum prices may have limited room to rise, Shanghai aluminum main force temporarily pay attention to the 15,000 mark pressure level; it is expected that the overall fluctuation range in February is 14500-15200
.