China Aluminum: July Production Hits New High, Shanghai Aluminum Trend To Be Driven

China's July primary aluminum production hit a new monthly high since 2002. Data from the National Bureau of Statistics of China on Thursday showed that primary aluminum production in July was 3.68 million tons, up 6% year-on-year. The average daily output in July was 118,710 tons, lower than 122,333 tons in June. As of August 14, LME0-3 aluminum discount was US$52.96/ton; domestic spot aluminum was quoted at 18,950 yuan/ton, down 40 from yesterday's price; offshore RMB was quoted at 7.1502 yuan against the US dollar. On Monday, August 12, the inventory of aluminum ingots in major domestic consumption areas was 828,000 tons, down 1,000 tons from Thursday, August 8. During the same period, the inventory of aluminum bars was 136,000 tons, up 2,000 tons from Thursday, August 8. Guotou Anxin Futures said that the social inventory of aluminum ingots and aluminum bars has not fluctuated much recently, and the total volume is at a high level in recent years. The weekly apparent consumption of electrolytic aluminum has stabilized and rebounded slightly month-on-month, but it is still at the off-season level. The contradiction between supply and demand is not strong, and Shanghai aluminum may continue to fluctuate around 19,000 yuan and wait for the driver. Guoxin Futures said that with the increase in supply and the decrease in demand, the overall social inventory is high, and the weak fundamentals put great pressure on aluminum prices. However, the industry's profit level is at a relatively low level in the past two years, and the downward space of aluminum prices may be relatively limited. It is expected that Shanghai aluminum will fluctuate, and it should be treated with a fluctuating mindset.

The current aluminum price is affected by multiple factors such as macroeconomic uncertainty, bearish market sentiment and the interweaving of bullish and bearish fundamentals. The future trend will depend on the combined effect of multiple factors such as the Federal Reserve's interest rate cut decision, the global economic recovery process and changes in downstream demand.