Recently, the overall commodity market has been volatile, with commodity prices led by precious metals and copper hitting new highs. On May 22, the minutes of the Federal Reserve meeting were "biased eagle", and the commodity market again showed a high adjustment. In addition, under overseas sanctions, as well as changes in national policies such as tariffs, differences in supply and demand between different regions have gradually emerged, amplifying concerns, which have been transmitted to prices, resulting in transactions and price differentiation in different markets.
As far as the aluminum market is concerned, the current basic weakness drags down the price, however, the macro policy oriented bullish sentiment still takes the upper hand, the trend suggests that aluminum investors comply with the macro trend, against the small trend of fundamentals, aluminum prices in June as a whole will show easy to rise hard to fall the center of gravity shift, below the focus 21000 yuan/ton integer threshold support strength, In the short term, it will face the front high resistance near 21,500 yuan/ton, and if it breaks through, it will face the integer threshold pressure of 22,000 yuan/ton higher.
Recently, the overall commodity market has been volatile, with commodity prices led by precious metals and copper hitting new highs. On May 22, the minutes of the Federal Reserve meeting were "biased eagle", and the commodity market again showed a high adjustment. In addition, under overseas sanctions, as well as changes in national policies such as tariffs, differences in supply and demand between different regions have gradually emerged, amplifying concerns, which have been transmitted to prices, resulting in transactions and price differentiation in different markets.
In this round of commodity transactions led by gold, silver and copper, the rise in aluminum prices has eased slightly. As of May 28, the main contract of Shanghai aluminum closed at 21,190 yuan/ton, since 2024, Shanghai aluminum has risen by 8.6%, far less than the rise of precious metals and copper.
Main body
Macro interest theme reappears to pay attention to future policy trends
In the changeable macro sentiment, the eyes of market funds have not yet left the commodity market, especially in the case of the future macro policy of the multi theme revealed again, even if the fundamentals have weakened, the trend of Shanghai aluminum slowly upward seems to have not stopped.
The participants of the conference include state-owned enterprises, private enterprises, foreign-funded enterprises, Hong Kong, Macao and Taiwan funded enterprises, specialized and special new "little giant" enterprises, individual industrial and commercial representatives. The content involved in the discussion of this meeting also released a certain market signal, which has received the attention of many parties. It is particularly noteworthy that at the meeting, the issue of deepening the reform of the power system was discussed first, and representatives of enterprises and experts expressed their opinions and suggestions on it.
China's power system reform has been launched since 2015, during which it has gradually realized power price reform, promoted the market-oriented trading of electricity, promoted the independent and standardized operation of power trading institutions, and orderly liberalized the distribution and sale of electricity. A spokesman for the National Energy Administration mentioned, "The next step will be to adapt to the new energy system and accelerate the construction of a new power system as a guide to deepen the reform of the power system and mechanism." First, improve the multi-level unified power market system, steadily promote the construction of provincial (regional, municipal) and regional power markets, improve the marketization degree of cross-provincial and cross-regional transactions, and strengthen the connection between markets. The second is to strengthen the connection between power trading varieties, continue to improve the medium and long-term market and auxiliary service market, and actively and steadily promote the construction of the spot market. Third, cultivate diversified market players and improve the mechanism for new energy and emerging market players to participate in the electricity market. Fourth, promote the modernization of governance capabilities, strengthen overall power planning and power supervision, and continue to accelerate the revision of electricity laws and regulations."
From historical experience, the issues raised by important enterprise symposiums presided over by the General Secretary in the past often appear at important points of internal and external environmental changes, and will provide important guidance for the direction and destination of future reforms. At the meeting, the proposal of "deepening the reform of the power system" once again made the market focus, according to the Hong Kong Wind News Agency reported that on May 24, the power sector was collectively active, hydropower, thermal power, virtual power plants, wind power, nuclear power and so on. Since 2024, the wind power index has reached a new high in more than two years.
Electrolytic aluminum is known as "coagulated electricity", and the electricity cost accounts for more than 30% of the total cost of electrolytic aluminum smelting, and most of China's electrolytic aluminum production capacity relies on thermal power production. Therefore, the direction of the future reform of the power system will largely affect the change in the cost of electrolytic aluminum smelting, which will be transmitted to the aluminum price. In the context of the realization of the "double carbon" goal, with the deepening of the reform of the power system, the price of high-carbon coal electricity or will be difficult to have the advantage of cost price, in the release of market signals, the future "deepening the reform of the power system" will become another speculation theme of aluminum price.
Aluminium fundamentals are showing signs of weakening
From the current fundamental situation, as supply continues to increase, demand enters the off-season, and the rhythm of aluminum ingots to warehouses is gradually weakening, aluminum fundamentals have shown signs of weakening. At the cost end, affected by the sharp rise in the price of raw material alumina, the cost of electrolytic aluminum smelting in May significantly increased, while at the same time, the aluminum price trend was mainly volatile, and the industry profit narrowed. According to SMM data, as of May 22, the average cost of electrolytic aluminum industry in May was 17,531 yuan/ton, up about 710 yuan/ton from April. Since the aluminum price in May was mostly in the first line of 20,000 yuan/ton shock, the cost rose sharply, and the average profit of the industry narrowed to near 3,000 yuan/ton, which was about 400 yuan/ton lower than the average profit in April.
The resumption of production in Yunnan continues, with China's primary aluminum (electrolytic aluminum) production reaching 3.58 million tons in April, up 7.2% year on year, according to the National Bureau of Statistics. The primary aluminum production from January to April was 14.24 million tons, an increase of 7.1% year-on-year. The increase in supply in April and May mainly came from the resumption of electrolytic aluminum production capacity in Yunnan. According to Baichuan Yingfu data, as of May 16, Yunnan's previous production capacity has been resumed about 810,000 tons, electrolytic aluminum supply continues to increase, Yunnan is still about 300,000 tons of production space will be gradually resumed in the next June, it is expected that the supply side will continue to increase in June. Aluminum import profit window remains closed, overseas aluminum prices do not have a price advantage, it is difficult to flow into the country to form a supplement.
The traditional consumption season of "gold 3 silver 4", the demand side did not show obvious bright spots, after the end of the peak season, the downstream aluminum processing and consumption gradually changed from the peak season to the off-season in May, and the downstream operating rate slowed down. According to SMM data, as of May 28, the operating rate of domestic aluminum downstream processing leading enterprises was 64.6%, which declined for the first time in nearly two months. After entering June, the off-season characteristics of the consumption end will be further revealed, and with policy support, home appliances, new energy vehicles and photovoltaic plates will continue to support the demand for aluminum.
After the "May Day" holiday, the inventory appeared after the normal holiday, and then changed again to the storage state, but overall, the aluminum ingots to the warehouse is not very smooth, and the speed of the warehouse is not as fast as the same period in previous years, to the end of May, the aluminum ingots inventory level has been higher than the same period in 2023, after the aluminum ingots for a long time in the past five years, the advantage of the lowest level in the same period has weakened. According to SMM data, as of May 27, the inventory of aluminum ingots was 781,000 tons, an increase of 13,000 tons from May 23, continuous inventory, aluminum rod inventory was 172,100 tons, a decrease of 9,000 tons from May 23, to maintain storage, continuous inventory of aluminum ingots will gradually form a check on the rise in aluminum prices. In addition, after the explosion of aluminum inventory, its inventory changes have also become the focus of market attention, which will be another potential risk factor affecting aluminum prices inside and outside, and it is necessary to pay attention to the trend of LME rules involving Russian aluminum warehouse receipts.
Future market outlook
As far as the aluminum market is concerned, the current basic weakness drags down the price, however, the macro policy oriented bullish sentiment still takes the upper hand, the trend suggests that aluminum investors comply with the macro trend, against the small trend of fundamentals, aluminum prices in June as a whole will show easy to rise hard to fall the center of gravity shift, below the focus 21000 yuan/ton integer threshold support strength, In the short term, it will face the front high resistance near 21,500 yuan/ton, and if it breaks through, it will face the integer threshold pressure of 22,000 yuan/ton higher.
#Shanghai Aluminum
