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2018 aluminum market outlook: environmental protection relay for aluminum prices slightly shifted up the center of gravity
Jan 05, 2018

In 2017, the domestic supply-side reform of the aluminum industry will be carried out to clean up the non-compliant production capacity and to strictly control the newly increased production capacity so that production capacity can be effectively controlled. At the same time autumn and winter heating season limited production, stage limits the growth of output. However, due to the concentration of policies in the second half of the year, the supply of the whole year is still quite abundant.

In 2018, the downturn in China's economy, dominated by traditional real estate, will affect the domestic consumption of aluminum in various industries. It is estimated that the apparent growth in consumption of electrolytic aluminum in 2018 will have somewhat slowed down with a growth rate of 6.5% to 37.67 million tons. Domestic electrolytic aluminum capacity growth is subject to policy control, according to the current existing policies and compliance capacity put into operation, is expected in 2018 electrolytic aluminum output of 38.07 million tons, an increase of 4%, oversupply situation will be eased.

At the same time, taking into account the impact of domestic environmental policies on electrolytic aluminum upstream raw materials than other non-ferrous varieties, with the continuous improvement of environmental standards, cost-side prices will still have support for aluminum prices.

In 2018, alumina production capacity in China can meet the demand for electrolytic aluminum. However, environmental protection is still an important factor that limits the start-up of its enterprises. It is estimated that the equilibrium price of alumina will be 3,000 yuan / ton and the fluctuation range will be 2700-3700 yuan / ton. Prebaked anodes With the restoration of industry profits, will promote more capacity environmental standards put into operation. However, its upstream petroleum coke and coal tar by environmental protection even more cost-support anode prices continue to run high, is expected to prebaked anode price in 4000-5000 yuan / ton. Thermal coal prices continue to be affected by the supply-side reform, the price will remain volatile range, thermal coal prices are expected to 460-600 yuan / ton.

Overseas aluminum electrolytic aluminum production capacity will gradually put into operation in the next few years. It is estimated that output will increase by 6.6% to 29.04 million tons in 2018, with a conservative demand estimate of 3% to 29.67 million tons. The supply and demand gap narrows to 680,000 tons.

According to our estimate of 37.67 million tons of electrolytic aluminum production in China, the corresponding equilibrium price is found on the production cost curve of 15,300 yuan / ton. Taking into account the reform and environmental protection is still supported by the price of aluminum is expected to fluctuate in Shanghai aluminum price range 14500-16500 yuan / ton. The same outside the country in the production cost curve to find the Lun Lun equilibrium price of 2,100 US dollars / ton in the vicinity. As there is still a gap outside, aluminum prices are relatively stronger than aluminum Shanghai aluminum, aluminum prices next year is expected to range between 2000-2250 US dollars / ton.

Supply-side reform and environmental protection policies are still the key factors supporting domestic aluminum prices next year, including the government's focus on future capacity targets and the structural impact of environmental protection on the supply of raw materials. Abroad need to pay attention to the future capacity of aluminum capacity to resume production and inventory decline more than expected impact. In the longer term, the supply and demand of aluminum both at home and abroad will be in a process of rebalancing in the next few years. As a whole, the volatility of aluminum prices will be relatively slow.

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