Aluminum prices increased by 4.51% in mid to late December

According to the Commodity Market Analysis System of Business Society, the average price of aluminum ingots in the East China market on December 26, 2023 was 19216.67 yuan/ton, an increase of 4.51% compared to the aluminum price of 18386.67 yuan/ton on December 11.

In the long term, the current price is in a sideways range after a high level decline. Since May, it has been fluctuating below 19000 yuan/ton, and by the end of August, it has exceeded 19000 yuan/ton. In September, aluminum prices first fell and then rose. In October, the center of gravity of aluminum prices fell back to around 19000 yuan/ton and fluctuated. In November, aluminum prices were weak and began to recover after mid December, returning to the front line of 19000 yuan/ton.

The recent increase in aluminum prices is due to

1. Clear inventory reduction and low social inventory levels

After the start of destocking in the second half of July, inventory remained relatively low. As of December 25th, the mainstream social inventory of electrolytic aluminum ingots in China was 414000 tons, with 149000 tons of inventory removed compared to November 30th. Based on year-on-year data, it is at a low level in the same period of nearly five years.

2. Strong cost support for alumina

The explosion at the fuel depot in the capital of Guinea has raised concerns in the market about the supply of bauxite. It is reported that Chinese alumina companies are highly dependent on Guinea’s ore, with a total of 91.104 million tons of bauxite imported from Guinea from January to November, accounting for 70.2% of the total import volume. In addition, domestically, due to the heavy pollution weather in the north, the Shandong alumina plant has been shut down for ten days. The supervision and management of mining in Shanxi region is relatively strict, and the mines in Sanmenxia area of Henan province have not yet resumed production, resulting in a shortage of ore supply in Shanxi and Henan provinces. The price of alumina is firm.

Future market forecast

The positive cost side combined with the elimination of explicit inventory is expected to have a high probability of strong aluminum price fluctuations in the short term.