On July 24, 2021, Typhoon “Fireworks” officially landed on the coast of Zhejiang and other places, causing heavy rains in many areas. Under the severe weather conditions of the typhoon, commodity logistics and enterprise production were affected to varying degrees. In this context, our website has conducted investigations on secondary aluminum enterprises and import traders representing the region of Zhejiang Province through multiple channels. The overall situation is as follows:
Cargo ships queuing to call at the port, the inventory of imported aluminum alloy ingots shows a decreasing trend
Under heavy rain and strong winds, it was difficult for all cargo ships to arrive at the port this week; among them, a large number of cargo ships gathered outside the Ningbo wharf waiting to call at the port, but the wharf has not yet given a specific berthing plan. A client of an import trader stated that according to the new notice from the Port Authority, it is expected that ships will gradually arrive at the port in 3 days (August 1). A batch of South Korean non-standard 102 arriving in Hong Kong on July 25 has been postponed to early August, and the specific arrival time in Hong Kong has not yet been determined. The cargo ships that have been docked at the port have also been delayed due to the suspension of the customs handling business. The specific time for handling the business still needs to be notified by the Port Authority. Fortunately, the port spot transactions are not affected, and the goods can be picked up normally. According to statistics from our website, the current inventory of imported ingots in warehouses in Zhejiang and Shanghai is 2,150 tons, a decrease of 1,100 tons from last week (July 22), a drop of 33.85%.
Most domestic companies stop production for 2-4 days and the overall impact is limited
Under the severe weather conditions, Ningbo and Yuyao were mainly affected by the typhoon, and most of the alloy ingot enterprises in these two places stopped production for 2-4 days. Although roads are restricted, because there are few aluminum alloy ingot enterprises in Ningbo and Yuyao, the superimposed typhoon is mainly concentrated on the 24th and 25th weekends. On the basis of the original enterprise’s smaller shipments on weekends and weak downstream demand, the market In-house finished goods inventory was basically the same month-on-month. According to the survey of sample enterprises by our website, all enterprises have resumed production one after another on this Wednesday (July 28), and there is no significant impact on production and operation for the time being.
Prices are rising everywhere, but long and short factors are intertwined
According to my non-ferrous net secondary aluminum alloy ingot (ADC12) price quotation, as of July 29, 2021, Foshan market is 18,700 yuan/ton; Wuxi market is 18,600 yuan/ton; Ningbo market is 18,600 yuan/ton; Chongqing market is 18,800 yuan/ton ; Fengcheng market is 18,600 yuan/ton; imported Korean and Malaysian ingots are 18,400 yuan/ton; it is 200-300 yuan/ton higher than before the typhoon “fireworks”. Judging from customer feedback, most of the reasons for the bullishness are that the arrival and customs clearance time of imported ingots will be affected. Primary aluminum has upward momentum and will drive the price of ADC12 to rise. The market also has different views. The reason for not being optimistic about the ADC12 price is that downstream demand has not improved. Alloy ingot companies have been maintaining low finished product inventories, and orders have not improved significantly.
The author’s point of view: From the perspective of supply, power rationing has continued in various places, and the superimposed social inventory has dropped to 750,000 tons, and the price of electrolytic aluminum has a basis for rising. Driven by primary aluminum, scrap aluminum prices are expected to rise with the background that the original scrap aluminum market gap has not been repaired. For alloy ingot companies, rising costs will push the price of ADC12 up. From the perspective of demand, the current “core shortage” problem in the automotive market has not been effectively alleviated. Faced with the traditional off-season of the industry, many die-casting companies have begun to take high-temperature holidays, and domestic demand is declining; overseas product supply is increasing. The price difference between the inside and outside of the product is small, and the performance of export orders is average. Generally speaking, when the typhoon “fireworks” dissipates, even if the price of electrolytic aluminum continues to rise, the price of ADC12 may be limited to follow up, and it is urgent to wait for the demand to rise.