This week, Lun Aluminum rose and continued to record highs
This week, Lun Aluminum rose and continued to record highs. We believe that there are three main logics that support the rise in aluminum prices, namely: cost support, accelerated depot, and pattern optimization, as follows:
1 [Cost support logic]: Alumina is the first cost component of electrolytic aluminum (accounting for 42%) and is the most important factor affecting the cost trend of electrolytic aluminum. Affected by the 50% reduction in output of Alunorte alumina plant of Hydro (Alunorte's output is approximately 6.4 million tons in 2017, which accounts for approximately 10% of the world's supply except China), and the supply of overseas alumina is tight, which superimposes Rual alumina production. Constrained expectations are expected to increase, and the price of joint stimulus will continue to climb. Up to now, Australian aluminum alumina (FOB) prices have risen sharply to 710 US dollars/ton, which is 90% higher than in mid-March, and the upward trend is still continuing. Driven by the increase in external disk prices, domestic alumina prices also rose significantly. We believe that as an alumina importer, China's overseas alumina shortage will further aggravate the domestic supply pattern, and domestic alumina prices will continue to increase. The increase in alumina prices will further drive the increase in electrolytic aluminum prices (cost support effect). The two are expected to form a "positive cycle."
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