Aluminum Prices Will Maintain A Volatile Trend in The Short Term, Increasing Supply Pressure

Recently, the U.S. consumer price index (CPI) rose 3.2 percent in July from a year earlier, showing a rebound after 12 consecutive months of decline. Although slightly lower than market expectations, the core CPI is still as high as 4.7%, continuing to decline from the previous month. In terms of supply, the speed of supply in Yunnan region has accelerated, which has further increased the supply pressure. However, due to the impact of poor logistics, the inventory of aluminum ingots and aluminum rods has been reduced by a small margin.
According to the latest data, as of August 10, the domestic aluminum ingot social inventory was 511,000 tons, down 14,000 tons from the previous week; The social inventory of aluminum rods was 74,900 tons, a decrease of 4,000 tons from the previous week. This indicates that the supply of aluminum ingots is still relatively tight, but the operating rate of processing enterprises continues to be weak.
With the increase in the supply of aluminum rods, but the downstream demand is general, it is expected that the processing fee of aluminum rods may be lowered. However, inventories of aluminum ingots remain at historically low levels, which may limit the production capacity of processors.
Overall, the recent macro sentiment is relatively volatile, and the supply side continues to increase, but there is not yet an expectation of oversupply. Although the inventory of aluminum ingots is at a low level, the operating rate of processing enterprises is still weak. Therefore, aluminum prices are expected to remain volatile in the short term.
Investors will need to keep a close eye on the inventory build-up and the impact of domestic policy. Inventory increases and policy changes may have a large impact on aluminum prices. At the same time, the global logistics situation and downstream demand changes also need to be paid attention to, these factors may have an impact on the aluminum market.
In summary, the aluminum market will face the dual challenges of increasing supply pressure and weak demand. In the short term, aluminum prices will remain volatile, and investors need to make cautious decisions and pay close attention to market dynamics.