The supply and demand pattern of aluminum rods fluctuated along with aluminum prices [SMM analysis]

Boosted by the sanctions on Russian aluminium, combined with domestic positive factors such as PBoC’s implementation of RRR cut and release of long-term funds, macro sentiment improved. In mid-week, the aluminum base prices adjusted its trend and returned to 19,000 yuan/mt. However, downstream manufacturers are gradually entering the CNY holiday. The mood of downstream manufacturers in receiving goods is not good, and the premiums and discounts are mainly weakening. The aluminum rod market prices moved rangedbound this week. According to company feedback, there was a concentrated recovery in orders in Hebei on Monday. However, as aluminum prices rise, downstream receiving sentiment weakened again, and a leading aluminum rod company returned to low inventory. The processing fees remained high and downstream purchasing sentiment was sluggish. The actual transaction price is lower than the quoted price.

Aluminum rod processing fees fluctuated during the week. On Friday, the average ex-factory price of 1A60 aluminum rod processing fees in Shandong was recorded at 400 yuan/mt; in Henan, the average ex-factory price of 1A60 aluminum rod processing fees was reported at 450 yuan/mt, up by 50 yuan/mt; the average ex-factory price of 1A60 aluminum rod processing fee in Inner Mongolia was reported at 150 yuan/mt, which was mainly stable; the average arrival price of 1A60 aluminum rod processing fee in south China was recorded at 450 yuan/mt, down by 50 yuan/mt WoW, with the highest premiums and discounts in south China, and the shipment was not good. Overall, although the aluminum rod market picked up slightly recently, as the end of the year is approaching, downstream cable manufacturers have entered the holiday period, and the weakening trend of demand has not changed. SMM expects aluminium prices to maintain a weak trend before the CNY, and we need to pay more attention on aluminum price trends and end-of-year stocking sentiments.

The operating rate of leading aluminum cable companies remained stable at 64.4%. In late January, due to the normal operation of transportation, the shipments of leading companies remained normal, and due to the demand for delivery of UHV orders, production was stable. According to research, some leading companies currently have a large number of UHV orders to deliver, and production personnel will return to work early for production. In February, they will mainly produce finished product inventories, and concentrated deliveries are expected to begin in March. The company has a small amount of raw material inventory and is still stocking up. However, the current aluminum prices fluctuated, and downstream are not in a good mood to stock up on high prices. January is coming to an end. As transportation is gradually suspended, and companies enter the holiday season, the industry will officially enter the off-season stage. The operating rate of aluminum cables may decline sharply in February.