Shanghai aluminum continues to maintain strong strength after the Spring Festival, electrolytic aluminum futures and spot both rose, spot exceeded 22,000 yuan/ton.
Aluminium for three-month delivery on the London Metal Exchange rose 2.6 per cent to 3,170 a tonne on the 8 February after hitting a high of 3,172 since October 19. Aluminium inventories at LME-approved warehouses fell to 768,250 tonnes, the lowest level since February 2007. The premium for LME spot aluminium over three-month contracts has risen to 40 a tonne, the highest since July 2018, indicating tighter supply in the vicinity.
On February 9, the domestic futures market opened, Shanghai aluminum futures main contract continued to rise, aluminum supply disturbance strengthened again, superimposed domestic aluminum ingot tired stock is not as expected, at the same time, domestic policies to promote consumption unchanged, aluminum prices continue to run strongly.
Behind the surge in aluminium prices are high energy prices, mainly in Europe, which have put pressure on smelters' costs. Meanwhile, the dispute between Russia and Ukraine, the world's leading aluminium exporter, has once again cast a worrying shadow over global supplies.
In addition, As baise city of Guangxi is the main production area of electrolytic aluminum and alumina in South China, the epidemic has put great pressure on the production and transportation of local enterprises and pushed up the aluminum price in the market. According to public information, Baise city in Guangxi province is the third largest alumina producer in China, with a total of five alumina enterprises in the region, with a total capacity of 9.45 million tons.
In order to prevent the spread of the Omicron virus strain, Guangxi Baise epidemic prevention and control upgrade, required at 0 o 'clock on February 7, all staff home isolation, the implementation of the "no in, no out" measures, alumina enterprises will also face difficulties in purchasing raw materials and have to reduce production lines, alumina transport to the outside has also been affected. Overall, alumina prices are expected to continue to move higher this month.
In addition to Baise due to the impact of the epidemic electrolytic aluminum enterprises have planned to reduce production, after the Spring Festival In Shanxi, Shandong and Henan due to environmental protection policies led to reduce production of alumina, superimposed a number of overseas production reduction news are pushing up aluminum prices. It is widely analyzed in the industry that it will be difficult for the region to recover in a short time based on the situation of zero-out epidemic in each region.
In fact, aluminum prices already saw a big rally in 2021, up 42 percent for the year, and are up about 14 percent so far in 2022.
At present, as the price of aluminum rises, Guotai Junan research report on February 7 said that the profit of aluminum ton is about 4889 yuan/ton. Insiders said aluminum prices are expected to remain high, and profits of relevant companies are expected to continue to improve.
Aluminum is one of five products expected to be in tight supply this year, Supplychaindrive.com said in its 2022 outlook report.
