According to the SMM survey, the upward trend of aluminum bar processing fees has been relatively obvious since March this year. Aluminum bar processing fees have risen to varying degrees in Shandong, Henan, Guangdong and Wuxi, especially in Guangdong. Take the φ 90 aluminum bar in Guangdong as an example. The processing fee for each ton of aluminum rod was still around 360 yuan per ton in early March and rose to about 660 yuan per ton in early April, an increase of nearly 83.33 percent. Why is there such a big increase? SMM conducted a simple survey.
Source: SMM
Tax cuts stimulate. The news of the March tax cut was released, from 16% to 13%, taking into account the interest rate spread of 3% and demand for invoices for the month, downstream will increase hoarding. SMM and more than 30 downstream profile factories learned that the overall raw material inventory of the profile factory in March was significantly higher than that in February, most of which were mainly due to increased procurement due to tax cuts.
The supply is reduced. According to SMM, due to the rise in coal prices and the sudden rise in cost pressure, an electrolytic aluminum plant in Xinjiang issued an announcement in mid-January to raise the price of aluminum water by 100 yuan per ton. It is difficult for aluminum rod enterprises that use aluminum water from the aluminum plant to bear the sudden increase in raw material costs. Eleven aluminum rod enterprises are basically out of production, directly resulting in a reduction in the supply of aluminum bars in consumption.
Consumption is for the better. In March, in addition to reducing tax spreads to promote downstream hoarding factors, downstream orders are also gradually improving. SMM has repeatedly stressed that in previous years, March-May is the peak season for profile enterprises to recover consumption, from the survey results in March, the downstream profile factory orders significantly increased month-on-month, thus stimulating the demand for raw aluminum bars.
Overall, there is a downward trend in supply, while consumption is increasing, and aluminum rod processing fees are rising naturally.
