[SMM analysis] dismal! Northern aluminum ingots can't be sold!

According to SMM, the recent transaction of aluminum ingots in the Northeast, Shandong, Henan, Tianjin and other northern areas is poor, compared with a month ago, the transaction situation is significantly weaker.

Northeast China: the arrival of goods increased, downstream mainstream consumers have a reduction in production, consumption seasonal weakness.

Northeast aluminum ingots are mainly from Inner Mongolia, it is reported that the recent increase in local shipments, such as Huo coal Hongjun, Chuangyuan and other aluminum plants have increased, the local supply of aluminum ingots is too sufficient, at the same time, consumption is gradually weakening, in July into seasonal consumption off-season reasons, coupled with the northeast downstream market is smaller, vulnerable to off-season impact. In addition, recently, SMM learned that a large local aluminum processing enterprise due to the reduction of orders to start a decline in the rate of decline, reduced demand for raw materials, and even the existence of their own sale of aluminum ingots for cash, the market oversupply situation is further highlighted.

Shandong, Henan and Tianjin areas: freight floating to promote the excessive increase of arrival, seasonal weakness of downstream consumption, long single transactions accounted for a relatively large.

SMM learned that in the early days, the Xinjiang Railway Bureau issued a preferential policy for transportation costs from Xinjiang to Zhengzhou, from Shihezi and Sanping in Xinjiang to Zhengzhou, from loading and unloading fees to operating miscellaneous charges decreased by 30% to 100%, freight floating to a certain extent stimulated the increase of aluminum ingots to the volume in Henan and surrounding areas. In addition, Henan recently increased the volume of Shenhuo in Xinjiang, while Weiqiao, which reduced production in the early stage of Shandong, also recently resumed production. In Tianjin, the arrival of aluminum ingots such as Mengtai has increased recently, and the supply of aluminum ingots in the three places has increased significantly compared with the previous period, especially in Henan, which can be known from the inventory data released weekly by SMM. In addition to the increase in the arrival of goods, the consumption of aluminum ingots in the three places is also subject to the seasonal consumption off-season, as July / August is the local downstream processing plant order weak period, raw material procurement has converged. In addition, the author understands that in the north, such as Shandong, Henan and other places, the long single accounts for a relatively large proportion, and the weekly average price or monthly average price is used to settle the settlement, the quantity of aluminum ingot purchased every week is more stable, and the long single accounts for part of the spot transaction, so the spot market is vulnerable to be affected.

SMM believes that the current northern aluminum ingots spot market sufficient supply, with the third quarter of Inner Mongolia, Shanxi, Shandong and other places aluminum plants resume production or new production capacity, spot supply pressure will increase, and into the lower reaches of the traditional orders in July / August off-season, supply oversupply will be more obvious, in the medium term, the northern downstream aluminum ingots spot transactions difficult to significantly improve.