The deep processing market has not given up

After the Chinese Lunar New Year this year, the price of LME Alluminium bottom is constantly being raised, and the market has stimulated a topic to be constantly mentioned: Will nickel (bullish) be followed by aluminum? Yesterday, the reporter took this issue and visited domestic and international exhibitors and researchers at the 2014 China Aluminium Industry Exhibition. Most people will not duplicate the nickel market.

The common link between aluminum and nickel is Indonesia. The Indonesian Ministry of Energy and Mineral Resources decided to ban the export of metal ore from January 12, 2014. Indonesia has rich nickel and bauxite reserves. Crude data shows that 68% of China's bauxite and 55% of nickel are from Indonesia. After the Indonesian ore export ban was implemented, nickel ore prices rose by more than 30%. During the period, LME aluminum prices rose gradually, rising from the lowest price of $1,671/ton over the past five years, closing yesterday at $1915, or an increase of 14.5%.

International aluminum prices have come out of the quagmire since 2013, allowing the market to see confidence and people are providing short-term logic in Lenovo's Indonesia. Rio Tinto analysts told Shanghai Daily yesterday that the rise in international aluminum prices was mainly due to the recovery of the US and European economies, which led to an increase in aluminum demand, but it is difficult for international aluminum prices to reach China. Because China’s demand is weak, China’s new supply is more.

China's primary aluminum production accounts for nearly half of the world's total. Shanghai Nonferrous Network analysts also believe that the domestic aluminum production capacity is oversupply, and inventory is at a historically high level. The main reason is that since this year, electrolytic aluminum production capacity in Xinjiang and other places has been more.

The price of Shanghai Aluminum, the Shanghai Iron & Steel Group, rebounded only 6% since it was built in March, which is far below the international aluminum price.

Will overseas prices soar, will it drive exports and then pull Shanghai aluminum prices? Rio Tinto thinks it will not. Because China imposes a 15% tax rate on exports of aluminum products and counts tariffs, China Aluminum exports do not have a competitive advantage internationally.

According to statistics, LME and the aluminum stocks of the previous period totaled more than 5.4 million tons, which is the highest level in four and a half years.

China Aluminum's demand is 80% in real estate construction. Since the beginning of this year, new start-ups of real estate in China have plummeted, and demand for aluminum and other doors and windows has shrunk. Many professionals believe that about 40% of the developed countries' aluminum is used in the industrial sector. Once the aluminum deep processing market is opened, China's demand is expected to increase. The aluminum industry has high hopes for aluminum substitute steel, aluminum substitute copper, and aluminum substitute wood in automobiles, wire and cable, and construction.

At the China International Aluminum Industry Exhibition 2014 Deep Processing Forum, Mr. Li, Deputy General Manager of Liaoning Zhongwang, was very optimistic about the application of aluminum deep processing products in transportation and other fields. The company has imported advanced equipment, vigorously developed aluminum deep-processed products, and plans to deep-process products in 2018. Income accounted for half of all income. Regarding the current deep processing market expansion, Mr. Li said that the demand is very large now, but there are not many products that meet the market, so the aluminum deep-processing market is still in its infancy, and short-term has little effect on driving demand.

Wang Dengwen, general manager of Beijing Haohui Strategic Information Consulting Co., Ltd., is equally optimistic about the use of aluminum deep processing in transportation and other fields, but it will take time to form a scale.