November 2020 cable raw materials (aluminum) monthly report

First, the fundamentals

1.
According to data from the National Bureau of Statistics, China's primary aluminum production in October increased by 9.
7% from the same period last year, reaching a record high, as new smelting capacity accelerated production
at a time of strong prices.
China's primary aluminum (electrolytic aluminum) production in October was 3.
2 million mt, up from 3.
162 million mt
in September, the data showed.
From January to October, China's primary aluminum production was 30.
63 million tons, an increase of 3.
5%
year-on-year.

2.
According to data from the National Bureau of Statistics, China's alumina output in October 2020 was 6.
39 million tons, a year-on-year increase of 9%; From January to October 2020, China's cumulative output of alumina was 60.
635 million tons, a cumulative decrease of 0.
8%; From 2015 to 2019, China's alumina production reached its highest in 2018, and has shown a downward trend
since then.

3.
According to data from the General Administration of Customs, China's exports of unwrought aluminum and aluminum products in October 2020 were 418,900 tons, down 1.
78% from the previous month and 2.
81%
from last year.
China's cumulative exports of unwrought aluminum and aluminum products from January to October 2020 were 3.
9801 million tons, down nearly 17.
15%
from 4.
804 million tons in January-October 2019.

4.
In October 2020, China imported 174,200 tons of alumina, down 27.
35% year-on-year and 50.
90% month-on-month, and imported 3,147,900 tons from January to October, an increase of 205.
15% year-on-year; In October 2020, China exported 23,000 tons of alumina, with a cumulative export of 139,600 tons from January to October, a net import of 171,900 tons of alumina in October, and a cumulative net import of 3,008,300 tons
from January to October.

5.
The latest data from the National Development and Reform Commission on December 2 shows that in October, the output of ten non-ferrous metals in the country increased by 9% year-on-year, and the growth rate increased by 4.
4 percentage points
year-on-year.
Among them, electrolytic aluminum production increased by 9.
7%, compared with a decrease of 1.
8%
in the same period last year.
From January to October, the output of ten non-ferrous metals in the country was 50.
69 million tons, a year-on-year increase of 4.
3%, and the growth rate fell by 0.
3 percentage points
year-on-year.
Among them, the output of electrolytic aluminum was 30.
63 million tons, an increase of 3.
5%, an increase of 2.
8 percentage points
.
Alumina production was 60.
64 million tons, down 0.
8% year-on-year and up 4.
4%
in the same period last year.

6.
The World Bank reports that the West African country of Guinea is now the world's second largest bauxite producer, ahead of China and behind Australia; According to data analysis in the World Bank's latest report on the outlook for commodity markets, Guinea's bauxite production increased from 59.
6 million tonnes in 2018 to 70.
2 million tonnes
in 2019.
The 18% increase allowed it to grab market share
from China.
China's output last year was almost the same as in 2018, at 68.
4 million mt of bauxite
.
However, China's production has barely grown since 2015; Guinea will now compete with Australia, which is currently the world's leading country with more than 105 million tonnes
of bauxite production in 2019.
Data shows that by 2029, global bauxite production will mainly come from Australia, Indonesia and Guinea
.

Second, the market review

Since November, China's downstream consumption has continued to maintain a strong trend, automobiles, home appliances and other orders have also maintained a growth trend, the fundamentals are generally good, Shanghai aluminum rose sharply within the month, continuously exceeded the high of 156,000, as of the end of the month, the main contract rose to 16,600 yuan / ton, compared with October, up 2,115, or 14.
72%.

In terms of the market, the market supply is tight, and the willingness of cargo holders to raise prices is strong, and the current spot premium is 90 yuan / ton; Although November is in the traditional consumption off-season, the decline in downstream demand is not obvious, enterprise orders are acceptable, stimulating the demand for aluminum ingots, but subject to high prices, receiving goods is relatively cautious, just need to prepare goods, the market fluctuates sharply, traders are more enthusiastic to enter the market, driving market transactions
.

East China: electrolytic aluminum inventory continues to decline, it is understood that it has fallen to less than 600,000 tons, coupled with the macro favorable boost, aluminum prices in November rose sharply, East China spot aluminum once exceeded the 17,000 mark, the highest rise to 17,100 yuan / ton, a new high since 2018; As of the end of the month, the spot aluminum price in East China was between 16750-16790 yuan / ton, up 1940 yuan / ton from the end of October, an increase of 13.
08%.

South China: Aluminum prices in South China rose in November, and as of the end of the month, the price of aluminum ingots with tickets was 17110-17210 yuan / ton, up 2120 yuan / ton from the end of October, an increase of 14.
1%; This month's market transaction is acceptable, the price continues to rise, traders are optimistic about the future market, frequent market operations, downstream enterprises due to orders are acceptable, just need to stock, market transactions did not show off-season performance, the current price is at a high level, beware of the later price fall
.

3.
Inventory

As of the end of November, LME aluminum inventory was 1374025 tons, down 88,900 tons, or 6.
08%, from the end of September, and the decline in inventory supported the price of Lun aluminum more obviously.

As of November 27, Shanghai aluminum stocks were 220373 tons, down 12,973 tons, or 5.
56%,
compared with the end of October.

Fourth, the waste market

In November, the price of scrap aluminum followed the sharp rise of aluminum ingots, some varieties in South China rose by 1400 yuan, and other regions also rose
to varying degrees.
At present, the aluminum alloy spray coating in East China is around 12100, the broken bridge material is around 11100, the price of cans is around 10900, and the machine aluminum is around 11900, which is about 1500 higher than the end of October
.

In terms of the market, in November, the scrap aluminum market due to the price soared, the transaction is more active, because the price continues to rise, the willingness of the holders to cover the goods is higher, the holding goods to rise, the market supply is significantly tightened, the downstream manufacturers of raw materials are generally out of stock, enter the market to find goods actively, and constantly raise the price to receive, it is understood that The high price of cans in East China once reached 12,000; not only the price of scrap aluminum rose sharply, the price of recycled aluminum alloy in November was also more obvious, especially in the middle and late months, the daily increase can reach 400 yuan, the current mainstream price of aluminum alloy ingots is around 16,800, and some aluminum plants due to insufficient inventory, the price exceeds 17,000 yuan / ton
.

Overall, there was a shortage of market transactions in November, whether it was scrap aluminum or recycled aluminum alloy ingots
.
Downstream demand is acceptable, coupled with electrolytic aluminum inventory at a low level in the year, there is still support for prices, short-term aluminum prices have little room for deep falls, and they will still move up after adjustment; Scrap resources are tight, and prices may still be firm
.

5.
Market outlook

This month's Shanghai aluminum rose sharply, continuously broke through the high of 150,000, at present, peak season consumption expectations have been slowly fulfilled, low inventory superimposed spot support aluminum prices have risen to a new high, almost broke through a 17-year high, but objectively speaking, the soaring aluminum price still has a certain inflated high component in it, some merchants also hold a certain disapproval attitude to this high price, although the inventory is still in a slow decline, but in some long funds profit out of the market, short-term aluminum prices have a certain shock adjustment demand, Follow-up can continue to pay attention to domestic fundamentals and inventory changes, if downstream consumption can still remain strong, it is expected that Shanghai aluminum in December as a whole or return to the high range of 10,000, the main force can pay attention to 1.
6-16,800 range fluctuations, spot above the 17,000 pressure level
.