March 2020 cable raw materials (aluminum) monthly report

First, the fundamentals

1.
According to the National Bureau of Statistics, China's primary aluminum (electrolytic aluminum) production in January-February was 5.
85 million tons, up 2.
4% year-on-year in the first two months of 2020, despite a sharp drop in demand due to the outbreak of the new crown virus, and smelting capacity put into operation at the end of last year pushed up supply
.
According to calculations, the average daily production from January to February was 97,500 tons
.
This is down from about 98,000 tonnes per day in December, the third highest level
on record.

2.
According to data from the National Bureau of Statistics, from January to February 2020, China's alumina output was 10.
451 million tons, a year-on-year decrease of 13.
0%.

The decline in alumina production was due to the dual factors of the epidemic and the market downturn
.
In terms of provinces and cities, the output of alumina in Shandong Province, Shanxi Province, Henan Province and Guangxi Province exceeded 1 million tons
.
As the main producing area of alumina in China, the total output of alumina in Shandong Province, Shanxi Province, Henan Province and Guangxi Province accounts for 89.
13%
of the total output of alumina in China.

3.
Customs data show that China's exports of unwrought aluminum and aluminum products in February 2019 were 343,000 tons, down 6.
83% year-on-year and 37.
86%
month-on-month.
The cumulative exports from January to February 2019 were 895,000 tons, a year-on-year increase of 9.
56%, mainly contributed
by the export volume of 552,000 tons in January.

4.
Customs data show that China's total alumina imports from January to February 2020 were 690,040 tons, up 422.
8% year-on-year, and export data has not yet been released
.
From January to December 2019, China's alumina export volume was 274862 tons, a cumulative decrease of 81.
2%, and the export amount was 115792 million yuan, a cumulative decrease of 78%.

5.
Customs data show that from January to February 2020, a total of 122,000 tons of aluminum scrap was imported, a year-on-year decrease of 60.
9% and a month-on-month increase of 24.
9%.

Although the number of import approvals has increased significantly, the impact of the epidemic and the Spring Festival has made its increase relatively limited, and the total amount of imported aluminum scrap approvals in Q1 2020 was 285,000 tons, and there are still a large number of approvals left
.

Second, the market review

Global epidemic worries are not eliminated, domestic inventory accumulation has exceeded market expectations, the market is full of pessimism, this month Shanghai aluminum followed the decline of Lun aluminum, after a wave of decline in February, the decline of Shanghai aluminum at the beginning of this month slowed down slightly, the overall shock around 13,000, but the overseas epidemic continued to spread, U.
S.
stocks plunged, oil prices plummeted, the dollar index jumped to a three-year high, further pressure on the metal trend, market risk aversion heated up, global macro stimulus policies successively introduced to trigger market panic about the economy, Shanghai aluminum followed other metals down Near the end of the month, the Shanghai aluminum index fell to 11265, a new low since March 2016, and a cumulative decline of 15.
33% this month; Continue to pay attention to the situation of the epidemic overseas
.

In terms of external trading, the foreign epidemic continues to deteriorate, the market panic is heavier, this month Lun aluminum continued to decline, near the end of the month, Lun aluminum intraday has fallen below the 1500 mark, the lowest down to 1481, a new low since February 10, 2016, this month cumulative decline of 14.
59%; From the trend point of view, the continuous spread of overseas epidemics still brings uncertainties to the global economy, the overall weak pattern of London aluminum remains unchanged, temporarily pay attention to repeated fluctuations around 1500, and the overall fluctuation range of London aluminum is expected to be 1400-1600 US dollars in April, and there is a possibility of continuing to hit a
new low.

In terms of the market, in the middle and early part of March, because the domestic epidemic has not been controlled, enterprises are slow to resume work, poor market demand, coupled with the continuous decline of the market caused by the epidemic, the wait-and-see atmosphere of enterprises is heavier, and the intermediary trading is also more cautious, after the middle of the month, the start of enterprises gradually increased, but affected by the unstable market, there is no obvious stocking phenomenon, downstream enterprises buy on demand, but the enthusiasm of middlemen to enter the market has increased slightly, overall, the aluminum market transaction in March was significantly less active
than in previous years.

East China: the outbreak of the epidemic at home and abroad, the market panic, although the domestic has been controlled, but the overseas epidemic is still spreading, aluminum prices fell endlessly, the decline in March expanded significantly, the middle and early half of the show a rapid decline, the largest decline in a single day once reached 800 yuan / ton, the decline in the second half of the year has slowed down, as of the end of March, East China spot aluminum prices in 11460-11500 yuan / ton, down 1690 yuan / ton from the end of February, the monthly decline reached 12.
83%.

South China: As of the end of March, the price of aluminum ingots in South China was between 11,750-11,850 yuan / ton, down 1,670 yuan / ton from the end of February, a decrease of 12.
4%; The market supply is sufficient, but because downstream enterprises mostly resumed work in mid-to-late March, the overall performance was oversupplied, and the weak demand of downstream enterprises at that time dragged down the consumption of aluminum ingots, the market transaction was less than expected, the domestic epidemic was controlled, and it is expected that the transaction in the South China market will improve in April
.

3.
Inventory

This month, the LME aluminum inventory once fell below 1 million tons, and then climbed, as of April 2, the total inventory of London aluminum was 1210475 tons, an increase of 128325 tons from the end of February, an increase of 11.
86%.

Affected by the overseas epidemic, LME aluminum stocks still have the risk
of continuing to rise.

As of March 27, the total inventory of Shanghai aluminum was 528072 tons, an increase of 88,985 tons, or 20.
3%,
from the end of February.
Domestic electrolytic aluminum social inventory (including SHFE warehouse receipt): Shanghai 169,000 tons, Wuxi 66.
1 tons, Hangzhou 143,000 tons, Gongyi 191,000 tons, South China Sea 431,000 tons, Tianjin 56,000 tons, Linyi 11,000 tons, Chongqing 14,000 tons, 8 major consumption places aluminum ingot inventory a total of 1.
676 million tons
.

Fourth, the waste market

In March, aluminum ingots fell sharply, scrap aluminum prices fell significantly, even exceeded market expectations, aluminum wire and aluminum alloy materials in South China fell by more than 1500 yuan / ton, the current aluminum wire price is around 10200, machine aluminum price is around 8700; The price of recycled aluminum alloy ingots is more obvious than the price of scrap aluminum, and the current price of standard ADC12 aluminum alloy ingots is around 13400, down 1100 yuan / ton from the end of February; The price of scrap aluminum in the East China market also fell by more than 1,000 yuan, the current price of aluminum wire is around 10,000, aluminum alloy spray coating 9000, cans 7900-8100 yuan / ton
.

The market supply is scarce, at present, most of the medium and large manufacturers are in a state of shortage of goods, and they are more active in entering the market, and the current price is generally raised to receive goods, and the overall market transaction is limited
.
In addition, it is understood that affected by the market, manufacturers and freight yards have different degrees of losses, and some small factories have chosen to stop production again and wait for the market to improve
.
Some large aluminum profile manufacturers have turned to the aluminum rod market
due to the difficulty of finding scrap aluminum raw materials and price problems.

Although the domestic epidemic has been controlled, but the overseas epidemic is rampant, the market pessimistic atmosphere is still heavier, the resistance to the rebound of aluminum prices is heavier, the short current domestic electrolytic aluminum enterprises loss and production reduction turmoil again, is expected to also support the price, April scrap aluminum prices may stop falling, but the rise needs more favorable guidance
.

5.
Market outlook

The epidemic continues to spread explosively around the world, and the number of confirmed cases worldwide quickly exceeded 1 million
.
At the same time, the global central bank has introduced a monetary release policy in an attempt to stabilize market confidence and increase market liquidity, and the People's Bank of China has continuously lowered the RRR
.
From the perspective of industry fundamentals, domestic terminal demand has slowly recovered, and export orders have been seriously canceled, and the obstruction is more obvious
.
The rate of inventory accumulation began to slow down, and aluminum rod stocks continued to fall
.
At present, the whole industry is generally losing money, and rumors of maintenance, production reduction, and storage are coming one after another
.
On the futures market, London aluminum continued to fall rapidly, and Shanghai aluminum showed some resistance
.
Whether the decline can be stopped here still needs time to be seen
.
Aluminum prices are expected to continue to fluctuate
in the short term.