SunSirs: Aluminum Prices Fluctuated at A High Level in the First Half of August, the Main Reason was the Rise in the Superimposed Cost of Electricity Curtailment

　　Aluminum prices fluctuated upward in August

　　The average spot price of aluminum ingots fluctuated at a high level in the first ten days of August, and the operating range was 19700-19900 yuan/ton.

　　On August 10, the average price of domestic aluminum ingots in the East China market was 1,9903.33 yuan/ton, which was an increase of 0.13% from the average market price of 19,856 yuan/ton at the beginning of the month.

　　Based on the average market price of aluminum ingots at the beginning of the year (January 1, 2021) at RMB 15,726.67/ton, the benchmark price has increased by 26.43%.

　　Guangxi’s electricity curtailment is becoming stricter

　　The electrolytic aluminum power limit in Southwest China is becoming stricter. China Southern Power Grid Guangxi Company requires the electrolytic aluminum plants in Guangxi Province to further reduce the power load by 30%. All aluminum plants using China Southern Power Grid need to reduce their current operating capacity by 30%. It is initially expected that Guangxi will be at the end of August The annualized operating capacity of the reduced production is about 270,000 tons, and the time for resuming production is yet to be determined.

　　According to statistics, since 2021, a total of five provinces’ electrolytic aluminum enterprises have reduced their production due to power curtailment policies, which have lowered their operating rates. According to the published data, the current planned and reduced production capacity reached 1.626 million tons/year, accounting for 3.7% of the national annual production capacity.

　　In July, the electrolytic aluminum plants in Yunnan Province may be required to increase the production limit from 25% to 30%. The electrolytic aluminum plants in Guizhou and Guangxi also started small power cuts two weeks ago. Some aluminum companies chose to perform annual maintenance in advance or reduce their load slightly. In response to the tightening of power curtailment requirements, Guizhou enterprises are required to cooperate with peak-shifting power consumption. In July, the shutdown of production capacity in Yunnan is almost hopeless, and the monthly reduction exceeds 70,000 tons. The Guangxi Power Grid issued an orderly power consumption notice for avoidance of peak and load reductions of 3 million million. Among them, the Baise Power Grid reduced the load by 500,000 kW, the Guest Power Grid reduced the load by 300,000 MW, and the Nanning Power Grid reduced the load by 360,000 kWh. According to the demand for load reduction in various places, the influence of electrolytic aluminum production capacity in the region may exceed 100,000 tons.

　　The cost side has risen slightly

　　According to rough estimates, the current average cost of the electrolytic aluminum industry will generally move upward in 2021, and the current increase is 11-12% from the beginning of the year, corresponding to the increase in aluminum prices by 26%. The main force of the cost-side rise is the rise in electricity prices and the price of raw alumina.

　　Forecast

　　August is in the off-season, and domestic demand is expected to slow down, posing a certain downside risk to aluminum prices. However, the cost and power curtailment have led to a reduction in production capacity, and the current market inventory is low, which supports aluminum prices.

　　The current price range of 18500-20000 yuan/ton is a steady-state shock range formed by market games. It is expected that the price of aluminum ingots will continue to be mainly around 19,000 yuan/ton in the near future. On the whole, the short-term downside risk is weakened, and the main operation will continue to be high and fluctuating.