Aluminum prices rise in October

After the holiday, aluminum prices rose in October, showing strong performance. According to the Commodity Market Analysis System of Shengyi Society, as of October 11, 2024, the average price of aluminum ingots in the East China market in China was 20720 yuan/ton, an increase of 3.70% from the market average price of 19980 yuan/ton on September 26.

Aluminum prices are expected in October

The reasons for the continued rise in aluminum prices in October are as follows:

1. Domestic macro positive news is released, and policies are boosting the non-ferrous sector. The central bank has proposed further interest rate cuts and reserve requirement ratio cuts to release liquidity, while also creating a shift towards refinancing to guide listed companies to repurchase and increase their holdings of stocks. At the real estate level, it is proposed to lower the interest rates of existing housing loans and unify the minimum down payment ratio for housing loans. Vice Minister of Finance Liao Min: We will actively study and introduce measures that are conducive to the stable development of the real estate industry. Make good use of special bonds to acquire existing commercial housing and use it as affordable housing in various regions. We are urgently studying and clarifying the value-added tax policy that links the standards for ordinary and non ordinary residential properties. The positive expectations brought by domestic policies, coupled with the positive expectations of terminal demand, have driven aluminum prices to remain firm and improve emotionally. Under the guidance of policy direction, market confidence has returned and sentiment is unlikely to subside in the short term. It is expected that the policy will continue to boost positive sentiment in October.

2. The inventory is in a continuous state of destocking, and the daily production of Yunnan electrolytic aluminum enterprises on the supply side is high, narrowing the upward space. However, recently, Southern Power Grid announced that Yunnan electrolytic aluminum may lift power restrictions this winter and next spring, and downstream electrolytic aluminum in Yunnan is expected to not reduce production in the fourth quarter; Multiple downstream sectors on the demand side have experienced a rebound in operating rates, with electrolytic aluminum and aluminum rod inventories in a state of slight destocking. The expectations for the Golden September and Silver October are good.

3. The supply of raw alumina is tight and the price is high. The limited mining in China has led to a slow progress in the resumption of alumina production, making it difficult for the alumina operating rate to continue to rise. The price of alumina has risen rapidly and is relatively high, providing strong cost support for aluminum prices.

Potential risks of aluminum price loosening in October

Risk point: Import and export may be affected by foreign policy factors, and some of the US 301 tariff policies will take effect on September 27th. This includes a 100% tariff on Chinese electric vehicles, a 50% tariff on Chinese solar cells, and a 25% tariff on Chinese steel, aluminum, electric vehicle batteries, and key minerals.