Aluminum prices rose in May

Aluminum prices rose in May. According to the Commodity Market Analysis System of Business Society, as of May 31, 2024, the average price of domestic aluminum ingots in the East China market was 21256.67 yuan/ton, which was 20540 yuan/ton from the beginning of the month, and increased by 3.49% in a single month.

Rising prices of raw alumina

Affected by the news that Rio Tinto Group has announced that its Australian Yarwun smelters and Queensland Alumina Limited have experienced force majeure in alumina shipments, with prices skyrocketing due to shortages in natural gas inventory/supply for power generation, domestic raw material alumina prices have remained strong.

According to the commodity market analysis system of Shengyishe, as of May 31st, the average price of alumina in the market was 3983 yuan/ton, and on May 1st, the average price of alumina in the market was 3500 yuan/ton, an increase of 13.81% compared to the beginning of the month.

The rapid increase in alumina prices has provided strong cost support for aluminum ingot prices.

Positive policy support at the end of the month

On May 29th, the State Council issued the Action Plan for Energy Conservation and Carbon Reduction from 2024 to 2025 (hereinafter referred to as the Action Plan). The aluminum related parts are as follows:

Energy saving and carbon reduction actions in the non-ferrous metal industry

1. Optimize the layout of non-ferrous metal production capacity. Strictly implement the replacement of electrolytic aluminum production capacity, strictly control the new production capacity of copper, alumina and other smelting industries, and reasonably layout the new production capacity of industries such as silicon, lithium, and magnesium. Vigorously develop the recycled metal industry. By the end of 2025, the proportion of recycled metal supply will reach over 24%, and the proportion of aluminum water direct alloying will increase to over 90%.

2. Strictly increase the admission of non-ferrous metal projects. New and expanded electrolytic aluminum projects must reach the benchmark level of energy efficiency and A-level environmental performance. The energy efficiency of new and expanded alumina projects must reach the advanced value of mandatory energy consumption limit standards. The energy efficiency of new polycrystalline silicon and lithium battery positive and negative electrode projects must reach the industry’s advanced level.

3. Promote energy-saving and carbon reduction transformation in the non-ferrous metal industry. Promote advanced technologies such as efficient and stable aluminum electrolysis, continuous copper matte smelting, vertical reduction magnesium smelting, and large-scale ore furnace silicon production, and accelerate energy-saving and carbon reduction transformation in the non-ferrous metal industry. By the end of 2025, the proportion of production capacity above the energy efficiency benchmark level in the electrolytic aluminum industry will reach 30%, and the proportion of renewable energy usage will reach over 25%; The proportion of production capacity above the benchmark level of energy efficiency in copper, lead, and zinc smelting reaches 50%; The non-ferrous metal industry has completed technological transformation or phased out production capacity below the energy efficiency benchmark level. From 2024 to 2025, the energy-saving and carbon reduction transformation of the non-ferrous metal industry will result in an energy-saving amount of about 5 million tons of standard coal and a reduction of about 13 million tons of carbon dioxide.

Aluminum prices tend to fluctuate strongly in the future market

At present, there is not much explicit inventory of aluminum ingots in China, and the post holiday inventory situation is better than market expectations. There is expected to be an increase in supply, but due to the relatively high domestic aluminum prices, the import window is closed, and the surge in LME inventory has little impact on the domestic market. The inventory of aluminum ingots and rods in mainstream consumer areas has been slightly depleted, with good consumption expectations and a relatively balanced supply and demand in the short term; The cost side has recently received strong support, and the demand side is expected to improve. In the short term, it is expected that the market will experience strong fluctuations and operations.

According to the commodity market analysis system of Shengyishe, the domestic ammonium nitrate market price trend remained stable in May. As of the end of the month, the market price of ammonium nitrate was 3870 yuan/ton, which was the same as the price of 3870 yuan/ton at the beginning of the month, a year-on-year decrease of 3.97%.

In May, the price trend of domestic ammonium nitrate market remained stable, and the operation of domestic ammonium nitrate manufacturers was stable. Recently, the supply of goods on site was normal, and the downstream procurement situation was average. The market price of ammonium nitrate was mainly stable. Recently, downstream demand for nitro compound fertilizer has been average, and the purchasing atmosphere in the domestic downstream civil explosive industry has cooled down. Domestic ammonium nitrate manufacturers are operating normally, and the price of ammonium nitrate has been mainly fluctuating recently. As of the end of the month, the mainstream negotiation prices in Shaanxi region are 5300-5500 yuan/ton, Shandong region is 3600-3800 yuan/ton, and Hebei region is 3700-3800 yuan/ton.

In May, the domestic price trend of concentrated nitric acid slightly declined, with an average price of 1830 yuan/ton as of the end of the month, a decrease of 1.44% from the initial price of 1856.67 yuan/ton. Mainstream enterprises in East China offer a price range of 1800-1900 yuan/ton, while those in the North and Central China offer a price range of 1800-2000 yuan/ton. At present, the supply side of the concentrated nitric acid market is normal, with a slight increase in cost trends. The market mainly relies on orders, and the transaction situation is not good. Industry insiders are mostly wait-and-see, and the on-site price of nitric acid has slightly decreased. As a result, the price of ammonium nitrate in the market has not changed much.

The price of upstream liquid ammonia slightly increased in May, with a price of 3100 yuan/ton as of the end of the month, an increase of 3.91% compared to the price of 2983.33 yuan/ton at the beginning of the month. In early May, some equipment underwent maintenance, and the supply side was relatively tight. Coupled with active downstream urea production, the amount of ammonia released decreased. And downstream procurement enthusiasm is high, agricultural demand procurement is still acceptable, industrial demand remains in demand, and the trend of the liquid ammonia market is on the rise. At present, the mainstream quotation in Shandong region is between 3050-3150 yuan/ton, and the market price of ammonium nitrate is stable due to the impact of rising costs.

Recently, the downstream civil explosive industry’s procurement has come to an end, and the demand for nitro compound fertilizer is average. The price trend of nitric acid has declined, and the liquid ammonia market in May has slightly increased. The positive and negative factors are shared, and the ammonium nitrate analyst from Business Society believes that the market price of ammonium nitrate may slightly decrease.

The price of boric acid has been weak and stable recently. According to the Commodity Market Analysis System of Business Society, as of May 29th, the average price of boric acid in the domestic market is 7275 yuan/ton. At present, domestic boric acid traders offer prices ranging from 6700 to 7800 yuan/ton (actual transaction prices for different brands, specifications, and products are mainly negotiated), with mainstream prices ranging from 6900 to 6950 yuan/ton based on sales volume.

In terms of overseas imported goods, the current foreign quotation for imported goods is concentrated at 7500-7800 yuan/ton (the actual transaction price of different brands, specifications, and products is mainly negotiated). According to the Commodity Market Analysis System of Business Society, the average market price of imported boric acid is 7618.75 yuan/ton, a decrease of 0.08% compared to the market average price of 7624 yuan/ton in early May

The price of boric acid began to decline from its high point in June 2022, and began to bottom out and fluctuate horizontally in May 2023. Currently, it is still operating in the range of bottom box fluctuations. If there is no positive news, it is expected to be difficult to change in the short term.

Price trend

Recently, the domestic POM market has been positive, with most brand prices increasing. According to the Commodity Market Analysis System of Shengyishe, as of May 28th, the mixed price of domestic POM was 13125 yuan/ton, an increase or decrease of 3.35% from the price level on May 1st.

Cause analysis

In terms of raw materials:

The domestic methanol market has been experiencing weak fluctuations in recent weeks. In the early stage, the foreign situation was unstable, and the amount of methanol arriving at the port was affected. Recently, the supply at the port has gradually recovered, and the equipment in the northwest production area has gradually recovered. The overall wait-and-see sentiment in the methanol market has increased, with average buying gas and mainly price fluctuations and declines, weakening the support for POM costs.

In terms of supply:

Recently, the operating rate of domestic POM enterprises has significantly decreased, and the overall load has decreased from 62%. Previously, Shenhua Ningmei and Xinjiang Guoye entered maintenance, resulting in a contraction in supply. At the same time, after digestion, the inventory position of the aggregation plant has decreased. In addition, the impact of the increase in imported materials from Seranis has led to strong confidence among manufacturers and an active increase in pricing. Overall, supply side support is still acceptable.

In terms of demand:

The load variation of downstream POM enterprises in China is limited, approximately 60%. The stocking situation requires immediate delivery to maintain production. Recently, there have been some orders released to chase up prices, but small orders are generally the main focus. At present, the main logic of the terminal factory is to maintain and digest inventory, and due to production restrictions in the later stage, the procurement operation may be maintained with caution. At present, the overall consumption level of the market is still acceptable, and it is expected that the market will return to a weak trend in the future. Overall, the demand side’s support for spot prices of POM is average.

Future Market Forecast

The POM market has shown an upward trend recently. The operating rate of domestic polymerization plants has decreased, and the expected supply of goods in the future has recovered. The pressure on the supply side is not obvious, and downstream consumption remains in high demand. It is expected that the future market will stabilize and consolidate.

This Saturday, the market price of fluoropropylene remained weak and stable. The follow-up of downstream inquiries and procurement is average, and the transaction atmosphere is average. According to the data monitoring system of Shengyishe, as of May 24th, the benchmark price of hexafluoropropylene in Shengyishe was 35875.00 yuan/ton, unchanged from the beginning of this month.

Raw material side: Recently, the domestic hydrofluoric acid price trend has remained stable, with slightly lower production of hydrofluoric acid units. There are still units waiting for market shutdown on site, and the spot supply of hydrofluoric acid has decreased. The production of anhydrous hydrofluoric acid is less than 60%. According to the data monitoring system of Business Society, as of May 24th, the benchmark price of hydrofluoric acid in Business Society was 11740.00 yuan/ton, an increase of 1.03% compared to the beginning of this month (11620.00 yuan/ton).

The downstream market is relatively quiet, with poor demand, and the focus is on purchasing for essential needs.

Business Society’s hexafluoropropylene analyst predicts that due to the recent high cost support of hexafluoropropylene, downstream market demand is poor, and on-demand procurement is affected, it is expected that the hexafluoropropylene market will operate weakly and steadily in the near future. More attention should be paid to market news guidelines.