Aluminum prices rose in May
Aluminum prices rose in May. According to the Commodity Market Analysis System of Business Society, as of May 31, 2024, the average price of domestic aluminum ingots in the East China market was 21256.67 yuan/ton, which was 20540 yuan/ton from the beginning of the month, and increased by 3.49% in a single month.
Rising prices of raw alumina
Affected by the news that Rio Tinto Group has announced that its Australian Yarwun smelters and Queensland Alumina Limited have experienced force majeure in alumina shipments, with prices skyrocketing due to shortages in natural gas inventory/supply for power generation, domestic raw material alumina prices have remained strong.
According to the commodity market analysis system of Shengyishe, as of May 31st, the average price of alumina in the market was 3983 yuan/ton, and on May 1st, the average price of alumina in the market was 3500 yuan/ton, an increase of 13.81% compared to the beginning of the month.
The rapid increase in alumina prices has provided strong cost support for aluminum ingot prices.
Positive policy support at the end of the month
On May 29th, the State Council issued the Action Plan for Energy Conservation and Carbon Reduction from 2024 to 2025 (hereinafter referred to as the Action Plan). The aluminum related parts are as follows:
Energy saving and carbon reduction actions in the non-ferrous metal industry
1. Optimize the layout of non-ferrous metal production capacity. Strictly implement the replacement of electrolytic aluminum production capacity, strictly control the new production capacity of copper, alumina and other smelting industries, and reasonably layout the new production capacity of industries such as silicon, lithium, and magnesium. Vigorously develop the recycled metal industry. By the end of 2025, the proportion of recycled metal supply will reach over 24%, and the proportion of aluminum water direct alloying will increase to over 90%.
2. Strictly increase the admission of non-ferrous metal projects. New and expanded electrolytic aluminum projects must reach the benchmark level of energy efficiency and A-level environmental performance. The energy efficiency of new and expanded alumina projects must reach the advanced value of mandatory energy consumption limit standards. The energy efficiency of new polycrystalline silicon and lithium battery positive and negative electrode projects must reach the industry’s advanced level.
3. Promote energy-saving and carbon reduction transformation in the non-ferrous metal industry. Promote advanced technologies such as efficient and stable aluminum electrolysis, continuous copper matte smelting, vertical reduction magnesium smelting, and large-scale ore furnace silicon production, and accelerate energy-saving and carbon reduction transformation in the non-ferrous metal industry. By the end of 2025, the proportion of production capacity above the energy efficiency benchmark level in the electrolytic aluminum industry will reach 30%, and the proportion of renewable energy usage will reach over 25%; The proportion of production capacity above the benchmark level of energy efficiency in copper, lead, and zinc smelting reaches 50%; The non-ferrous metal industry has completed technological transformation or phased out production capacity below the energy efficiency benchmark level. From 2024 to 2025, the energy-saving and carbon reduction transformation of the non-ferrous metal industry will result in an energy-saving amount of about 5 million tons of standard coal and a reduction of about 13 million tons of carbon dioxide.
Aluminum prices tend to fluctuate strongly in the future market
At present, there is not much explicit inventory of aluminum ingots in China, and the post holiday inventory situation is better than market expectations. There is expected to be an increase in supply, but due to the relatively high domestic aluminum prices, the import window is closed, and the surge in LME inventory has little impact on the domestic market. The inventory of aluminum ingots and rods in mainstream consumer areas has been slightly depleted, with good consumption expectations and a relatively balanced supply and demand in the short term; The cost side has recently received strong support, and the demand side is expected to improve. In the short term, it is expected that the market will experience strong fluctuations and operations.
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