Aluminum prices rose in April

Aluminum prices fell in April. According to the Commodity Market Analysis System of Business Society, as of April 30, 2024, the average price of domestic aluminum ingots in the East China market was 20596.67 yuan/ton, an increase of 5.35% compared to the market average price of 19550 yuan/ton at the beginning of the month (4.1).

Strong cost support for rising alumina prices

In April, the price of alumina rose. On the one hand, due to the tight domestic supply side, the overall operating rate of alumina in April decreased month on month. Looking at different regions, the operating rate of alumina in Shanxi has significantly decreased, while the operating rate in Guangxi has rebounded; On the other hand, the expectation of tightening overseas supply has strengthened, and the spot price of overseas alumina has risen. It is reported that Alcoa’s Kwinana alumina plant is expected to shut down from the second quarter, and all production is planned to stop in the third quarter, involving a production capacity of 2.19 million tons per year.

Macroscopically favorable, non-ferrous sectors rise together

In March, the Purchasing Managers Index (PMI) of China’s manufacturing industry was 50.8%, a significant increase of 1.7 percentage points from the previous month. The manufacturing industry has shown an unexpected recovery. The domestic economy continued to develop well in the first quarter, with positive automobile production and sales data and strong demand expectations. Coupled with the rise of the non-ferrous sector and sector linkage, the sentiment was positive.

Overseas, the US inflation in March was higher than expected, and the expectation of the Federal Reserve’s interest rate cut in June weakened. Even the outlook for July seems more unstable. The year-on-year growth rate of the US PCE price index in March was 2.7%, exceeding the expected 2.6% and the previous value of 2.5%. The month on month growth rate was 0.3%, which is in line with expectations and remains unchanged from the previous level, indicating continued inflation in the United States. But overall, it is in the path of interest rate cuts.

Increased cost side game in May under the expectation of abundant water season

In addition to the main raw material aluminum oxide, the cost of electricity is also the largest part of the production cost of electrolytic aluminum, accounting for 30-40% of the total cost. Gradually entering the rainy season, the cost of hydropower in Yunnan is expected to decrease. In terms of thermal power, we mainly focus on the price trend of thermal coal in May. Overall, there is an expectation of a decrease in electricity costs in May.

Narrowing upward space for aluminum prices in May

At present, aluminum prices have seen a significant increase, and aluminum factory profits have widened. With the arrival of the abundant water period in May, Yunnan’s resumption of production will continue to advance, and the certainty of supply increase is strong. It is expected that the upward space for aluminum prices in May will narrow.