The Price Of Aluminum And Copper Goes Up And Down, Or Keeps High In Stock

On September 13, Yunan Aluminum Co., Ltd. and Guangsheng Nonferrous Metals Limited trading. In fact, the price of metal aluminum rose to a 13 year high last week. With the increase of supply cost, the soaring demand and the limitation of production capacity, the aluminum price has risen by 48% this year. At the largest aluminum conference in North America that ended on September 10, producers, consumers, traders and shipping companies agreed that the current global supply chain problem is unlikely to be alleviated in the short term, and it may take up to five years to solve it.

Data from Minsheng securities showed that domestic basic metal prices rose last week, with cathode copper, aluminum, zinc, lead, nickel and tin rising by 1.37%, 6.46%, 2.73%, 0.30%, 4.61% and 3.55% respectively. The prices of basic metals abroad generally rose, with copper, aluminum, zinc, nickel and tin rising by 2.72%, 7.35%, 3.72%, 3.04%, 1.50% and 3.55%, respectively.

Luntong and Shanghai copper reached their daily moving average last week, reaching a new high in nearly a month. Data from wind and last period exchange showed that cathode copper closed at 70080.0 yuan / ton last week, up or down 1.37% weekly, 0.03% monthly and 21.35% annually. Aluminum closed at 22670.0 yuan / ton last week, up or down 6.46% weekly, 6.01% monthly and 46.64% annually.

"The main contradiction of aluminum price lies in the supply side." Guo Xinyu, an analyst at Minsheng securities, pointed out that more than half of the provinces in the first half of the year did not achieve the goal of "dual control". As a "big energy consumer", it is expected that provinces may introduce relevant policies to further limit electrolytic aluminum production in the second half of the year. Similarly, the rise in copper prices faces the same policy pressure. In addition, the lack of international supply is also an important reason for the rise of aluminum and copper raw materials.

Many well-known institutional analysts have pointed out that in September, the pattern of weak supply and demand under low inventory has broken, and the high price of copper and aluminum may continue to exceed market expectations.

Foreign supply declines

For a long time, China's bauxite import dependence is high.

From January to July 2021, imports account for more than 50% of the total domestic bauxite supply. Among them, Guinea is one of the most important bauxite importers in China, and bauxite imports from Guinea account for more than 50% of the total imports. After the coup d'etat in Guinea, only the airport is closed, while the production, import and export by sea are in normal operation. Cai Fangyuan, an analyst with China Galaxy Securities, pointed out that "if the coup lasts for a long time, imports and exports will be affected, and the aluminum industry will face greater cost upward risk."

Copper mines are going through the same test in terms of supply.

According to the announcement of several companies, the world's top 15 copper producers produced 3.09 million tons of copper concentrate in the second quarter of 2021, with year-on-year and month on month growth of 2.1% and 1.1%, and the recovery of output was lower than expected. In May 2021, kamoa, Timok and other world-class copper mines were put into operation, and the tension of copper concentrate was greatly eased, and the TC (crude refining cost) increased from $30 / T to more than $60 / T.

CITIC Securities pointed out that "with the end of the ramp up in production capacity of many new mines, the peak of copper supply increase in the year has passed."

As for the supply of scrap copper raw materials, Malaysia announced that from the end of October, the metal content of imported scrap copper will reach at least 94.75%, which is basically equivalent to the Chinese standard, which also means that it will occupy China's supply share. Malaysia accounts for about 20% of China's imported scrap copper raw materials. After the implementation of the new standard, it is difficult to supplement this gap from other regions in the short term, and the shortage of copper scrap raw materials will be further expanded.

"Gold nine silver ten" under production restriction

In addition to the impact of the lack of foreign aluminum and copper supply, many well-known institutional analysts pointed out that domestic power rationing and "dual control" of energy consumption and other factors are also important reasons for the recent rise in aluminum prices. "The main contradiction of aluminum price lies in the supply side." Guo Xinyu, an analyst at Minsheng securities, predicts that in the second half of the year, provinces may introduce relevant policies to further limit electrolytic aluminum production capacity.

From the demand side, many previous factors, such as extreme weather such as flooding in many places in China, the spread of delta epidemic in many places, the slowdown of PMI boom expansion in domestic manufacturing industry, and the weakening of copper and aluminum material operating rate from July to August also pushed the previous domestic demand into the low point of the year.

The supply of copper raw materials will return to the tight channel.

"In September, the SMM (Shanghai Nonferrous metal network price index) PMI (purchasing manager index) index of copper downstream industry was 51.35%, with a month on month increase of 0.16%, indicating the beginning of the peak consumption season in September." CITIC Securities pointed out that, first of all, with the negative impact of extreme weather and sporadic epidemic situation gradually weakening, car core shortage is expected to gradually ease in the third quarter. Secondly, the consumption of copper and aluminum in the manufacturing industry is expected to recover, and the industry represented by construction real estate is expected to show seasonal strength in September. In addition, with the gradual recovery of overseas economy, August may be the low point of domestic economy in the second half of the year, and copper and aluminum consumption is expected to gradually strengthen in the peak season.

But the consumption strength in the peak season will encounter the dilemma of low inventory. Yang Guangxi, an analyst at Huawen research, said that although the risk of copper strike in Chile was weakened and the interference factors at the mine end were gradually removed, under the influence of domestic restrictions, the electrolytic copper production was not as expected, and the domestic inventory continued to decline. As of September 10, under the background of three rounds of aluminum dumping and storage totaling 210000 tons, the domestic social aluminum inventory / LME (London Metal Exchange) aluminum inventory was 751000 tons / 1.32 million tons, which was 50 / 650000 tons lower than the high point in the year; Under the background of a total of 80000 tons in three rounds of copper dumping and storage, the domestic copper social inventory / LME copper inventory was 43.2/234000 tons, a decrease of 40 / 20000 tons compared with the high point in the year.

Analysts of CITIC Securities pointed out that under the low inventory level, with the continuous global liquidity easing under the uncertainty of overseas employment recovery, supply disturbance and the improvement of consumption month on month, the inventory will be further reduced. "The pattern of weak supply and demand in the early stage is broken, and it is expected that the high-level persistence of copper and aluminum prices will be stronger than market expectations, among which the aluminum price is expected to continue to rise."

At present, the domestic electrolytic aluminum production capacity has dropped sharply. In the long run, the total production capacity of electrolytic aluminum will touch the red line of 45 million tons, and the production capacity will remain stable. Although the downward trend of PMI on the demand side reflects the growth or slowdown of manufacturing industry, the higher aluminum price leads to the reduction of downstream orders, and the performance of real estate and automobile industry is flat.

However, in the future, benefiting from new energy and other fields, the demand is expected to increase steadily, and the gap between aluminum supply and demand is obvious. As a high-quality low-density material, aluminum can effectively reduce the weight of the car body. In the future, the main demand will be concentrated in the new energy vehicle industry. Cai Fangyuan said, "with the rapid development of the new energy automobile industry, the demand for aluminum has increased significantly, and the downstream demand will remain hot. It is expected that the aluminum industry will rise in the future."

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