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[SMM analysis] production reduction, superimposed suspension of production in the northern region of aluminum rod market supply and demand is worrying
Jul 22,2020 09:18CST
translation
Source:SMM
According to SMM understanding, the recent northern aluminum rod manufacturers appear to reduce production or stop production trend. Due to the implementation of production restrictions on environmental protection in Jiaozuo, Henan Province, local aluminum rod factories are all in a state of suspension of production, and normal production and operation activities are restricted. Some aluminum rod enterprises in Luoyang area have stopped production due to poor market demand. Several aluminum rod production plants in Inner Mongolia have or are considering implementing production reduction plans, and individual aluminum rod manufacturers in Shandong are more inclined to produce high-end customized aluminum rods with high processing fees. The output of common aluminum rod decreases again and again. On the whole, the supply end of aluminum rod in the north is weaker.
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2020/07/22:

According to SMM understanding, the recent northern aluminum rod manufacturers appear to reduce production or stop production trend. Due to the implementation of production restrictions on environmental protection in Jiaozuo, Henan Province, local aluminum rod factories are all in a state of suspension of production, and normal production and operation activities are restricted. Some aluminum rod enterprises in Luoyang area have stopped production due to poor market demand. Several aluminum rod production plants in Inner Mongolia have or are considering implementing production reduction plans, and individual aluminum rod manufacturers in Shandong are more inclined to produce high-end customized aluminum rods with high processing fees. The output of common aluminum rod decreases again and again. On the whole, the supply end of aluminum rod in the north is weaker.

From the point of view of the market supply pattern, Shandong, Inner Mongolia and Henan are the main producers of aluminum rods in the northern region, of which Henan's total production capacity accounts for about 14.2% of the national aluminum rod production capacity, Inner Mongolia accounts for 13.1%, and Shandong accounts for nearly 36.9%. And the production capacity of a large local aluminum rod enterprise in Shandong accounts for about 18% of the country's total production capacity. From the spot sales of aluminum rods, the aluminum rod enterprises in Henan are in a state of suspension. At present, the aluminum rods produced in Shandong and Inner Mongolia basically cover all the needs in the northern region.

But on the other hand, there are not many new orders for aluminum strands in the State Grid and Rural Power Grid this year. After entering the seasonal off-season, downstream aluminum cable manufacturers are subject to order reasons, and the operating rate has declined compared with May. And although the start-up of large cable factories in Jiangsu, Shandong and other places is stable as a whole, the start-up of other small and medium-sized cable factories across the country is not very optimistic. From the point of view of downstream cable manufacturers' stock, the market demand for aluminum rods is obviously weaker, which in turn suppresses the increase in the output of aluminum rod factories.

Generally speaking, the aluminum rod market in the northern region is currently in a state of weak supply and demand.

Under the background of relatively high aluminum prices, the above-mentioned large aluminum smelting and aluminum rod enterprise in Shandong took the lead in adjusting the price, reducing the aluminum rod processing fee to less than 100 yuan per ton, which has a price advantage of nearly 400 yuan per ton compared with other northern aluminum rod enterprises, in order to promote consumption and achieve the goal of harvesting more markets, but at the same time, this leads to the compression of the profit margins of other pure aluminum rod production enterprises that do not have the advantage of aluminum smelting end. Measures have to be taken to reduce production or stop production or produce other high-end products. In essence, the above description reflects the supply and demand of aluminum rods in the oligopoly market to some extent. At present, the aluminum rod processing fee in the northern region is deadlocked to maintain a low shock, and it is expected that it will be difficult to fluctuate significantly in the short term in the future. Pay attention to the later recovery of aluminum cable factory demand and the impact of aluminum base price trend on aluminum rod processing fee. (SMM Xu Man 021 Mel 51595898)

Source: SMM

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