Aluminum prices drop to around 19000

Aluminum prices continue to decline. According to the Commodity Market Analysis System of Shengyi Society, the average price of aluminum ingots in the East China market on July 29, 2024 was 19140 yuan/ton, a decrease of 6.16% from the market average price of 20396.67 yuan/ton at the beginning of the month (July 1).

Reasons for the decline

Macro factors: There are signs of a weakening recession in overseas data, and the Federal Reserve’s Beige Book shows that businesses expect future growth to slow down, and the labor market continues to be weak. CME shows that the probability of the Federal Reserve’s descending order in September has increased to 91.9%, and the expectation of a rate cut in July has fallen through. Domestically, the economic data for the second quarter was released, with a GDP of 4.7%, which was lower than expected.

The supply and demand fundamentals are weak, downstream replenishment is falsified, and destocking is not smooth. As of July 29th, the inventory of electrolytic aluminum in major domestic markets was 795000 tons, which is 33000 tons higher than the inventory of 762000 tons on July 1st.

Short term long short game intensifies

At present, the price of aluminum ingots has fallen to near the marginal cost, and the upstream raw material side is tight, which provides some support for the price. In the short term, the long short game is intensifying.

According to the monitoring of the commodity market analysis system of Shengyi Society, the domestic price of LLDPE (7042) was 8478 yuan/ton on July 18th, and the average price was 8411 yuan/ton on July 25th, with a price drop of 0.79% during this period.

According to the monitoring of the commodity market analysis system of Shengyi Society, the domestic price of LDPE (2426H) was 10137 yuan/ton on July 18th, and the average price was 10037 yuan/ton on July 25th, with a price drop of 0.99% during this period.

According to the monitoring of the commodity market analysis system of Shengyi Society, the domestic price of HDPE (5000S) was 8275 yuan/ton on July 18th, and the average price was 8175 yuan/ton on July 25th, with a price drop of 1.21% during this period.

The trend of polyethylene continued to decline this week. International crude oil prices have fallen, and the cost side is bearish on the polyethylene market. With the restart of some polyethylene maintenance units, there are still expectations of an increase in the supply side. The operating rate of downstream product industry has decreased, and demand is in the traditional off-season, with limited market order follow-up. The market mentality is bearish, the trading atmosphere on the market is not good, the quotes of production enterprises are loose, traders are following the trend and lowering prices, and the main focus is on offering discounts for shipments.

On July 26th, the polyethylene L2409 contract on the Dalian Commodity Exchange opened at 8288 yuan and closed at 8291 yuan, a decrease of 4 yuan, with a maximum of 8320 yuan and a minimum of 8274 yuan, a decrease of 0.05%. This week, the polyethylene futures market fell weakly, which is bearish for the spot market.

There is an expectation of an increase on the supply side; Agricultural film is in the off-season of demand, with low factory start-up rates and low load operation; The demand for low voltage brushed products is average, and there is insufficient follow-up on new orders; The trend of polyethylene futures market is weak; There is currently no positive support, and it is expected that polyethylene will continue to operate weakly.

In terms of imports: In June, China imported 19583 tons of lithium carbonate, a decrease of 20% compared to the previous month; The average import price in June was 87000 yuan/ton.

From the perspective of import source countries, in June, lithium carbonate from Chile accounted for 80% and from Argentina accounted for 17%, with import volumes of 15652 tons and 3434 tons respectively.

In terms of exports, in June, China exported 501 tons of lithium carbonate, reaching a new high for the year.

Recently, domestic lithium carbonate has continued to accumulate inventory, import volume has increased, global lithium carbonate projects have been put into operation and production capacity has continued to increase, and prices have remained weak.

The price of ethylene glycol was relatively strong in the first half of July, but began to decline slightly last week. Currently, the price is beginning to digest sideways. According to data from Shengyi Society, as of July 22, the average price of domestic oil to ethylene glycol was 4680 yuan/ton, an increase of 2.59% from the average price of 4561.67 yuan/ton in the East China market on July 1. The prices in each region are as follows:

The spot price range for mainstream manufacturers in East China is between 4700-4950 yuan/ton; The spot price of ethylene glycol in the South China market is 4650 yuan/ton, and the external execution price range of mainstream manufacturers in Central China is 4650 yuan/ton; The spot price for mainstream manufacturers in North China is 4600-4700 yuan/ton.

On July 22, 2024, the spot basis of ethylene glycol at the port stopped falling and stabilized, while the contract basis was close to low and far from high. The lower basis price for July rose slightly by 5 yuan/ton today. As of the close, the lower basis price for July was 20-23 yuan/ton, and the lower basis price for August was 29-32 yuan/ton.

On July 22nd, the price of coal to ethylene glycol was relatively low, with a domestic price range of 4100-4330 yuan/ton, including taxes.

Inventory data shows a slight rebound

In the early stage, the explicit inventory data of the port significantly decreased, driving the price of ethylene glycol from 4400 yuan/ton to over 4700 yuan/ton. Recently, the inventory data has slightly rebounded. On July 22, 2024, the total spot inventory of ethylene glycol in the main ports of East China was 598600 tons, an increase of 3700 tons compared to the total spot inventory of 594900 tons on July 18.

Recent device updates

A set of 1.8 million tons of ethylene glycol in Jiangsu, with an initial production of 900000 tons, was shut down in early April. The production line is scheduled to restart this week and is expected to be discharged in the second half of the week; The other 900000 unit is currently operating at 80-90% load.

The 400000 ton/year ethylene glycol/EO unit of Fujian United was temporarily shut down last weekend due to a malfunction, with an expected shutdown time of 1-2 weeks.

There is a high probability of a sideways trend in the price of ethylene glycol

Under the expectation of import pre increase, the driving effect of inventory factors on prices in the early stage is weakening. Currently, inventory is relatively low, which provides some support for prices; In terms of demand, downstream polyester is reducing production to maintain prices, coupled with lower than expected terminal demand in the weaving industry, the industry is weak, and demand is weak. It is expected that the price of ethylene glycol will enter a sideways digestion stage in the short term.

According to the monitoring of the commodity market analysis system of Shengyi Society, the 1 # tin ingot market in East China fell this week (7.12-7.19). The average market price at the beginning of last week was 275460 yuan/ton, and the average market price at the beginning of this week was 261610 yuan/ton, a decrease of 5.03%.

The recent decline in tin prices is mainly influenced by fundamentals and macro sentiment. Recently, although the export of Indonesian tin ingots has not fully recovered, the marginal export volume has gradually increased, and the Myanmar mine has also increased due to the clearance of inventory from the beneficiation plant last month. The supply side support for tin prices has decreased. Lunxi significantly reduced its inventory at the beginning of the year, and currently its inventory has dropped to around 4000 tons, with a reduction rate of nearly 50%. Domestic inventory reached a high of 19400 tons at the end of May, and after a month of destocking, it dropped to 16100 tons in July. Domestic and international destocking provides support for tin prices.

On the demand side, semiconductor consumption is expected to improve solder material consumption this year, but currently has limited impact on overall demand. Domestic tinplate has shown some improvement driven by exports, but the accumulated inventory pressure is not small.

It is expected that the exchange will maintain a destocking status in the third quarter. The supply-demand contradiction is not severe, and it is expected to be mainly volatile in the short term.