July 2021 cable raw materials (aluminum) monthly report

First, the fundamentals

1.
Data show that in June, China's primary aluminum (electrolytic aluminum) output was 3.
1767 million tons, and electrolytic aluminum production declined in June, and the "electricity shortage" led to some enterprises reducing production and reducing the supply of electrolytic aluminum
.
Due to weather and other reasons in July, it is expected that production may still decline
.

2.
Data show that in June 2021, China's alumina output was 6.
228 million tons, an increase of 11.
85% year-on-year, and some alumina enterprises were newly put into production but have not yet produced products in June, and some enterprises reduced production and operation
due to raw materials and other reasons.

3.
Customs data show that China's exports of unwrought aluminum and aluminum products in June 2021 were 454,397.
4 tons, an increase of 3.
48% from 439,096.
5 tons in May 2021 and a year-on-year increase of 28.
35%; The export value was 1,551.
5 million US dollars, an increase of 67.
82%
year-on-year.
From January to June 2021, the cumulative export volume of unwrought aluminum and aluminum products was 2,616,125.
7 tons, an increase of 10.
7% year-on-year; The cumulative export value was 8,329.
7 million US dollars, an increase of 32.
5%
year-on-year.

4.
Customs data show that China's alumina imports in June were 275,000 tons, up 89.
20% month-on-month and down 34.
95%
year-on-year.
Australia is the largest supplier, Australia's alumina exports to China in June were 137223.
46 tons, an increase of 47.
26% month-on-month and a year-on-year decrease of 61.
26%.

5.
According to Reuters survey: the surplus of supply and demand in the aluminum market is expected to be 390,000 tons in 2021 and 59,000 tons in 2022
.
At the same time, the average price of three-month spot aluminum on the London Metal Exchange in 2021 is expected to be $2293/ton
.

6.
A few days ago, Guangxi Power Grid issued an orderly electricity consumption notice of 3 million yuan for peak avoidance, of which Baise Power Grid reduced the load by 500,000 kilowatts, Guest Power Grid by 300,000 million kWh, and Nanning Power Grid by 360,000 kWh
.
According to the demand for load reduction in various places, the production capacity of electrolytic aluminum in the region may affect more than 100,000 tons
.

Second, the market review

In July, Shanghai aluminum rushed higher again, the main force once pulled up above 20000, there were many pullbacks during the session, but the overall trend was still biased to the upside, as of the end of the month, the main 2109 contract of Shanghai aluminum closed at 20085, with a monthly cumulative increase of 6.
84%; In July, the overall operation of Lun aluminum continued to be strong, and the upward trend of aluminum prices was obvious, with the highest intraday rise above 2600, and as of the end of the month, it rose nearly 3.
4%
from the previous month.

After entering July, the market still showed signs of the off-season, inventories were further degraded, and the inflection point was still coming, forming a strong support for prices; Due to bad weather and epidemic reasons, Henan, Jiangsu traffic is blocked, market arrivals plummet, and under the summer high temperature power rationing policy, production capacity in many places is greatly limited, although the storage is sold again within the month, but the impact on market demand is still small, the overall supply side is tight The situation does not change, boosting spot prices further higher
.

In terms of the market, under the influence of the off-season, the orders of electrolytic aluminum downstream enterprises such as aluminum plate and aluminum plate strip fell slightly compared with the previous period, coupled with rising prices, downstream enterprises are afraid of heights, and they mainly need to receive goods at low prices
.

In East China, although July is the traditional consumption off-season, due to power cuts and other reasons, it is still unknown whether the limited power in Yunnan can release millions of production capacity, and some aluminum companies in Guangxi and southwest Guizhou have also received power rationing requirements recently, making the market worry about the tightening of the supply side
.
Supply side disturbances, and macro favorable promotion, July electrolytic aluminum price overall performance shock upward, the end of the month of the rise accelerated, gradually to the 20,000 mark, as of July 30, East China spot aluminum in 19830-19870 yuan / ton, up 1070 yuan / ton from the end of June, an increase of 5.
7%.

As of the end of the month, the price of aluminum ingot tickets in South China was between 20170-20270 yuan / ton, up 1100 yuan / ton from the end of June, an increase of 5.
8%; Traders are only enthusiastic about entering the market
.

3.
Inventory

LME aluminum inventories continued to decline in July, and the rate of decline increased significantly, as of the end of the month, LME aluminum stocks were 1395225 tons, down 182,850 tons from the end of June, a decrease of 11.
6%.

The continuous decline in inventories supported the price of Lun aluminum, and the center of gravity of Lun aluminum continued to rise in July, standing at the $2600 mark
.
In July, Shanghai aluminum inventories continued to decline, but the decline slowed down significantly, especially in the middle and first half of the year, basically in a stable state, little change, and the decline in Shanghai aluminum inventories in July was mostly reflected in the second half of the year
.
As of July 30, Shanghai aluminum stocks were 256214 tons, down 32,527 tons
from the end of June.

Fourth, the waste market

In July, aluminum prices rose again, and scrap aluminum prices rose more obviously; In June, the price of scrap aluminum in the South China market increased by about 400-500, and the current price of 63 old materials is 15600, and the price of aluminum wire is about 17300; At present, East China aluminum alloy spraying old material about 15100, broken bridge material 13900, can about 13300, pure can can can be increased
.

In the market, with the rise of spot prices, the price of scrap aluminum has also risen sharply, but the current price has been high, and merchants have sold goods at a high level, and the market supply has increased, but the low-price source is still relatively rare; In addition, with the rise in raw material prices, the price of aluminum alloy ingots is also more obvious, and in terms of aluminum rods, profits are narrowing; At present, Fubao understands that due to the large number of low-price stockpiling in the early stage, the current scrap aluminum receipt price of some aluminum ingot manufacturers is not significantly rising, mainly based on consumption inventory; The stick factory reported that it was difficult to receive good goods, and the phenomenon of price comparison was serious
.

As the spot price reaches the previous high, the rise of scrap aluminum in recent days will continue to narrow, after the big rise does not rule out the phenomenon of falling, it is not recommended that merchants continue to chase higher, need to be vigilant to fall, short-term scrap aluminum prices or difficult to follow the spot to continue to rise
.

5.
Market outlook

In July, Shanghai aluminum soared again, and the main force once rose above 20,000, with a monthly cumulative increase of 6.
84%.

As far as the current fundamentals are concerned, the support below the aluminum price after the inventory inflection point is coming or weakened, but the tight supply side situation in the year has been difficult to change, it is expected that the aluminum price may continue to rise, but there is not much space above, and the follow-up needs to be vigilant against the risk of moderate pullback, it is expected that the aluminum price in August or continue to run at a high level, intraday or there may be a shock adjustment, Lun aluminum focus on 2550-2650; Shanghai aluminum main focus on 1.
94-20,400.