[SMM Analysis] against a background of more than a hundred drops in the base price of aluminum, the processing fees for aluminum bars in Guangdong and tin are still falling?

The spot trading price of aluminum ingots in Guangdong and Wuxi fell significantly this week. According to the background of SMM data, the average weekly price of aluminum ingots in Guangdong last week (06.10 06.14) was around 14136 yuan / ton, while this week's average price of Guangdong aluminum ingots was 13954 yuan / ton, which is about 182 yuan / ton lower than that of last week. Similarly, the weekly average price of aluminum ingots in Wuxi last week was around 14028 yuan / ton, while this week's average price was around 13886 yuan / ton, and the two-week spread was around 142 yuan / ton.

In the context of the sharp fall in the base price of aluminum ingots in Guangdong and tin, how does the processing fee for aluminum bars change?

In Guangdong, the processing fees for aluminum bars of this week's φ 90, φ 120 and φ 178 specifications are all between 340 and 440 yuan / ton, and the average weekly price is about 20 to 40 yuan / ton lower than that of last week, and the fluctuation within the week is relatively small. The processing fees for the three specifications of aluminum bars in Wuxi this week are all between 270 and 400 yuan / ton, and the weekly average price is 20 to 60 yuan / ton lower than that of last week, and the weekly price fluctuation is only less than 20 yuan / ton. See the following figure for details.

Source: SMM

Source: SMM

In some cases, aluminum base prices have fallen, and aluminum rod producers and traders tend to raise processing fees to make up for the losses caused by falling aluminum prices. However, aluminum prices have plummeted by more than $100 this week. On the contrary, processing fees in Guangdong and tin have continued to be reduced. SMM believes that the most direct reason for this phenomenon is the weakening of downstream consumption.

SMM early repeatedly stressed that June-August this year is the aluminum processing enterprise orders weak period, the consumption of related aluminum raw materials will also be affected, this week into late June, downstream manufacturers orders reduced, the purchase of raw materials therefore reduced. SMM's actual research also learned that the overall new orders received by the aluminum profile factory in June were lower than in May, and the opening rate may fall further than in May, as confirmed by the continued decline in aluminum bar processing fees.

From the point of view of the change of processing fees, the current processing fees of aluminum bars in Guangdong and tin basically return to the level of a year ago, because the current inventory change is relatively small, superimposed the expectation of follow-up consumption, SMM believes that the subsequent processing fees of aluminum bars in the two places will not be able to rebound significantly in the short term.