In 2021, the aluminum price will run in the range of 2300 dollars to 3800 dollars per ton; in the first quarter of this year, the overall aluminum price will run in the range of 3100 dollars to 3755 dollars per ton. Where is the driving force for the rising aluminum price?

First, the cost side ushered in a considerable increase. In the past two years or so, the price of alumina has basically maintained a trend of slight fluctuations, and the price has not changed significantly. The big change is the price of electricity and other raw materials such as anodes. The rise in electricity prices directly pushed the cost of electrolytic aluminum to increase by more than 314 dollars/ton. Due to the rise in crude oil prices around the world, anode prices have continued to rise, from less than 3,000 yuan/ton in 2020 to more than 6,000 yuan/ton this year, driving the cost of electrolytic aluminum to rise by about 1,500 yuan/ton. In addition, the rise of other raw materials and the increase of comprehensive expenses have pushed up the cost of electrolytic aluminum to a certain extent. On the whole, the cost of electrolytic aluminum has increased from about 14,000 yuan/ton in 2020 to about 18,000 yuan/ton today. The support of the cost makes it difficult for aluminum prices to return to a relatively low level.

Second, demand keeps growing. Since the outbreak of the epidemic, market demand has resumed growth in a short period of time in a "retaliatory" manner, and the demand for aluminum ingots has increased significantly. Although the domestic production of electrolytic aluminum continued to grow, and the annual import volume also increased from about 100,000 tons to more than 1 million tons, the overall inventory continued to go out of storage. In the past two years, the social inventory of aluminum ingots in China has been lower than before 2020 for most of the time, reflecting the recovery of market demand and strong support for aluminum prices.

Third, global aluminum plants continue to reduce production. In 2021, the electrolytic aluminum industry has become the focus of strict control of production capacity. The release of production capacity that lasted for more than a year has been terminated, and the production capacity of electrolytic aluminum has been compressed to varying degrees. In addition, flood disasters, typhoons and other factors have also caused some operational capacity compression to varying degrees, and transportation is often affected. Due to the continuous rise of energy prices and the continuous rise of electrolytic aluminum production costs, European aluminum plants continue to reduce production, and the scale of production reduction is also about one million tons, and international aluminum prices continue to rise. Under the combined action of relevant global factors, aluminum prices continue to hit record highs.

Fourth, driven by capital, the futures market is extremely hot. Due to the good recovery of domestic production and a large amount of international funds entering the domestic market through various channels, the daily transaction volume of domestic Shanghai aluminum has risen from less than 100,000 lots in normal years to more than 200,000 lots, and the transaction value has also increased to more than 10 billion yuan. In the case of frequent bullish factors, aluminum prices have repeatedly reached new highs and continue to run at high levels.

Continued high aluminum prices and changing markets have brought a lot of uncertainty to the aluminum market, with challenges and opportunities coexisting.

First, high aluminum prices bring huge profits to electrolytic aluminum plants. The electrolytic aluminum industry has been in a state of loss or low profits for a long time before 2020. With the continuous rise of aluminum prices, the profits of electrolytic aluminum plants continue to increase. In the past two years, the profit of aluminum plants once reached the level of 7,000 yuan / ton, and the whole industry has changed.

Second, changes in aluminum prices disrupted the rhythm of transactions. The range and frequency of aluminum price fluctuations have increased significantly, from the original daily fluctuation of less than 100 yuan / ton to more than 200 yuan / ton in a single day, and gradually normalized, and even a single day of thousand yuan. Rise and fall. Due to the rapid rise and fall of aluminum prices, traders and downstream processing plants lose their normal trading rhythm, and often suffer losses due to rapid changes in aluminum prices. Prudent trading and on-demand trading have become routine in the market. There are few downstream manufacturers that purchase goods to increase inventory. With the continuous upward movement of aluminum prices, the prices of products such as home appliances in the terminal market have been pushed up.

Overall, increasing the recycling of aluminum will be the destination for the development of the aluminum industry.

DONGHENG ALUMINUM is a large-scale industrial and trade integration enterprise integrating R&D, production and sales. The company has more than 100 outstanding employees and is located in the beautiful Qingdao. Mainly engaged in the production and sales of aluminum sheets, foils and coils. The company's scale has been continuously expanded, and its sales network has covered more than 60 countries around the world. The company takes the initiative to undertake social responsibilities, and regards ecological environmental protection as the key task of development.