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[SMM analysis] Why did the discount of Gongyi aluminum ingots expand to hundreds of yuan?
Jul 12,2019 14:20CST
translation
Source:SMM
What happened in Gongyi area? why did the aluminum ingot paste in Gongyi area expand to hundreds of yuan in a short period of time?
The content below was translated by Tencent automatically for reference.

According to SMM, for more than a month, the aluminum ingots in Gongyi area have always been around 70 to 90 yuan / ton for the current month, and the price difference with the aluminum ingots in East China is about 80 yuan / ton. However, in the past two days, the local aluminum ingots have continued to expand, from 70 to 90 yuan / ton to 100 to 120 yuan / ton in the previous month, while the East China aluminum ingots are still near Pingshui. In other areas of the north, there is no change of more than 30 yuan / ton.

What happened in Gongyi area? why did the aluminum ingot paste in Gongyi area expand to hundreds of yuan in a short period of time?

After investigation and analysis, SMM believes that government preferential policies such as taxes and freight have stimulated a sharp increase in local shipments, while weaker consumption is difficult to digest all supplies, so spot discounts continue to expand.

1. The increase in the arrival of goods in Gongyi has something to do with the government's preferential policies. In May, the Urumqi Railway Bureau stipulated that the loading and unloading freight and other miscellaneous operating fees of aluminum ingots shipped from Xinjiang to Zhengzhou were 30% to 100% lower, resulting in a decrease in the freight cost of aluminum ingots, which stimulated the growth of local shipments. In addition, because the Gongyi municipal government tends to build the local into a national aluminum ingot trading center, the local government has some preferential policies for spot enterprises in the use of water and electricity, housing rental, tax registration and value-added tax and income tax, in order to encourage enterprises to move in, which also promotes the growth of the number of local spot enterprises to a certain extent, so that the local arrival of goods also tends to increase.

two。 The consumption of aluminum ingots is poor. There are three main reasons: 1) after July, the market enters the traditional consumption off-season, the downstream aluminum enterprise order decreases, the aluminum ingot consumption therefore weakens. 2) it is reported that recently, the price of a roll-casting coil sold by an enterprise in Gongyi is relatively low, which is about 200 yuan / ton lower than the original market price. Some local aluminum enterprises take into account environmental protection and cost factors and buy more roll-casting rolls as raw materials to divert the consumption of some aluminum ingots. Consumption is poor from the output can also be seen, as shown in the following figure, this week Gongyi aluminum ingot output refresh the second lowest position after the Spring Festival.

Source: SMM

SMM believes that the recent Gongyi local aluminum ingots to more, if consumption has always been difficult to improve, it is expected that the local spot discount will be difficult to narrow quickly in the short term.

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