London Metal Exchange aluminium stocks fell by 4,500 tonnes on January 17 to their latest level of 399,700 tonnes, a near three-month low.
The supply gap prompted a shift in expectations, with Goldman Sachs Group Inc. raising its aluminum price forecast. A report by its analysts predicted that aluminium prices in London could average $3,125 a tonne in 2023, up from a previous forecast of $2,563.
Analysts also expect global inventories to be just 1.4 million tonnes, down 900,000 tonnes from a year ago and the lowest since 2002. Aluminum prices are expected to climb to $3,750 a ton in the next 12 months, up more than 44%.
Recent overseas macro data, domestic policy favorable frequently, the macro environment to warm promote non-ferrous metal rebound, LME aluminum continued strong operation, as of press, LME aluminum futures at $2,595 / ton, up 12.24% week.
Looking back to 2022, aluminum prices hit a record high in February after a geopolitical conflict. Then the European energy crisis and the global economic slowdown caused many smelters to cut production, and prices plunged again.
In this regard, Guolian futures analyst Jiang Yixing said that the current European natural gas prices have fallen sharply, it is expected that the European electrolytic aluminum plant shut down due to the energy crisis will gradually resume production. In addition, this year’s economic downturn in Europe and the United States has become the consensus market, most likely will drag down aluminum consumption demand.
Notably, Goldman is bullish on commodities in general and sees insufficient supply buffers as a result of underinvestment in recent years. It is bullish on demand for the metal in Europe and China, sees a shortage of the metal in 2023, and sees upward price momentum extending into the spring as the Fed rate hike cycle slows.
In the domestic market, Shanghai aluminum futures continued to rise since the beginning of the year, as of January 17, the closing price of 18,580 yuan/ton, nearly two weeks up about 4%.
Spot market, Shanghai metal net spot aluminum ingot January 17 daily price of 18490~18530 yuan/ton, the average price of 18510 yuan/ton, up 60 yuan/ton from the previous trading day. Spot market aluminum ingot trading light.
On the supply side, due to the coexistence of production resumption and production reduction, there is a certain support for aluminum prices.
According to the report released by the National Bureau of Statistics, the production of primary aluminum (electrolytic aluminum) in December 2022 was 3.43 million tons, a year-on-year growth of 10.3%. Electrolytic aluminum in Guangxi and Sichuan continued to resume production, but affected by the power shortage in Guizhou, local electrolytic aluminum enterprises were required to stop tank production twice in a row, and the electrolytic aluminum production was limited within a month. The output from January to December was 40.21 million tons, up 4.5% year on year.
In January, according to SMM statistics, domestic electrolytic aluminum production has not been increased on a large scale, and the power shortage in southwest China is difficult to be alleviated in the short term. In January, electrolytic aluminum enterprises in Guizhou will continue to significantly reduce production, and the resumption of production in Sichuan and Guangxi will slow down due to power and profit constraints.
In terms of demand, currently in the off-season and approaching the holiday, the downstream aluminum processing enterprises began to have a holiday, the construction of low. The domestic real estate market has limited support for aluminum prices. The latest data released by the National Bureau of Statistics shows that the investment in real estate development nationwide in 2022 was 13,289.5 billion yuan, down 10 percent from the previous year.
Mysteel is bullish on aluminum extrusion market demand in 2023, despite the impact of the domestic epidemic and policy changes in the real estate industry, the agency said, aluminum consumer demand growth is slow. However, new energy, automotive lightweight and other industries have become the main direction of the development of the aluminum profile market. It is expected that in 2023, the output of industrial profiles in the whole aluminum will continue to increase.