In May 2021, a Korean flexible duct manufacturer planed to buy aluminum pet film from its Chinese supplier. And learned the price was rising 18% than in Feb 2021. Finally, this purchasing plan stopped. What’s the reason for the rising price of aluminum pet film? There is no doubt that it is raw material.
The aluminum ingot was rising from 17000RMB/Ton on Mar, 23rd to 20000RMB/Ton on May,7th, with a markup of 17%. The top price was over 20000RMB/Ton and created a new record.
Let’s discuss the reason in detail.
I. China focuses on realizing the target for “carbon neutral”，as the scheduled date. It requires manufacturers to take effective measures to control carbon emission. The aluminum manufacturer is one of the companies that depend on coal-fired power generation. So the production expansion of aluminum is slow, the capacity is declining, which leads to reduce the supply of aluminum ingot.
The Chinese government controls the construction of electrolytic aluminum capacity strictly. In the past ten years, this industry faces a situation with excess capacity and make small profits even losses. To control the construction of capacity, promote this industry to develop. Thus, the relevant policies and regulations introduced one by one.
II. The sudden change of diplomatic relations between the Chinese and Australia. The National Development and Reform Commission (NDRC) recently issued a statement. Due to the current attitude of the Australian government towards China-Australia cooperation. From this date, all the activities under the China-Australia strategic economic dialogue mechanism co-led by the NDRC and relevant departments of the Australian government suspended indefinitely. As we know, Australia is the major producer of bauxite and alumina. This announcement exacerbates the tensions between the two countries. And it leads to pushing the rising of raw materials further.
III. In early 2021, the soaring price of commodities globally was the focus of worldwide attention in society and the market. In China, the price of aluminum, copper was also changed with it, that brings a lot of pressure for buyer and seller.
IV. According to the market, the whole social inventory reached the top record in off-season storage with 1.25 million tons in the middle of March. This is the low level of off-season storage these years. It shows the aluminum ingot storage was a reducing process.
After well knowing about the reasons, will the aluminum ingot keep rising?
Although the Chinese government chaired a meeting to ensure the deployment of commodity supply. With the recovery of the global economy and the promotion of vaccination, the price of commodities, like aluminum, will still stay high. The price inflation, increasing demand, and reducing capacity may cause a fall of the price slightly. but it’s difficult to go back to the level in 2020. This is the author’s opinion.
Currently, the price of aluminum ingot is declining. But because of the heavy demand and the capacity limit, more and more suppliers increase the processing charges to rush to buy the aluminum foil. In fact, the price customers buy wasn’t falling down but higher than the original one.
So, to customers who need aluminum products, it’s not necessary to wait for aluminum ingot to drop significantly. How about improving the added-value and technical content by the product itself. So that the raw material cost will not impact the price of the product strongly.
Welcome everybody to discuss with us about the aluminum laminated materials. And welcome to inquire with us.
