LME and SHFE Aluminum Prices Decline, Global Production Stable

Price

• As of the last day, LME opened at $2,536/ton and closed at $2,486/ton. Today, LME opened at $2,471/ton.
• As of the last day, SHFE opened at 19,980 Yuan/MT and closed at 19,845 Yuan/MT. Today, SHFE opened at 19,795 Yuan/MT.
• As of the last day, MCX closed at 226.90 Rs/Kg. Today, the market opened at 226.45 Rs/Kg.

Demand and Supply

• In August 2024, the Oceania region significantly influenced global primary aluminum production. Despite a month-on-month decline in the region's output, global production only slightly decreased from its record high, largely due to stable volumes elsewhere. Oceania's contribution to global production fell from 2.62% in July to 2.49% in August.
• The International Aluminium Institute reported that global primary aluminum production in August was 6.179 million tonnes, down from 6.185 million tonnes in July. However, this represents a 1.2% increase year-on-year compared to 6.106 million tonnes. The daily average production decreased slightly to 199,300 tonnes from 199,500 tonnes the previous month but was up 1.17% from 197,000 tonnes a year ago.
• Overall, global primary aluminum production remained robust in August 2024, as output in many key producing regions held steady at the high levels achieved in the prior month.

News

• Positive Momentum in Asia's Aluminium Alloy Ingot Market: The Aluminium Alloy Ingot market in Asia is gaining momentum, with rising prices driven by increased scrap costs and a favorable market outlook, bolstered by the Federal Reserve's recent interest rate cut. In Malaysia, prices rose by 0.5% in mid-September. However, a fire at Press Metal Aluminium Holdings' smelter on September 9th affected about 9% of capacity, with a four-month recovery anticipated. Meanwhile, a new partnership in Indonesia could boost future supply.

Expert Opinion

• On the macroeconomic front, there is uncertainty regarding the US Fed's potential rate cut in November, with the chances of a 50 basis point cut and a 25 basis point cut appearing almost equal. The market is keenly awaiting the upcoming employment and inflation data from the Fed this week. Domestically, the Loan Prime Rate (LPR) has remained unchanged, which has somewhat dampened local economic sentiment.
• In terms of fundamentals, the domestic aluminum market has seen a slight increase in supply, while alumina prices have risen due to tight availability, keeping production costs high. With the peak season from September to October, downstream aluminum operations have remained stable, and consumption is showing steady improvement. However, there are concerns about the negative effects of foreign tax policies on domestic aluminum processing companies. Currently, aluminum inventory is in a destocking cycle, with solid supply and demand dynamics observed in September and October. Overall, given the favorable short-term macro conditions and stable fundamentals, the aluminum market is expected to experience upward fluctuations in the near term.