Market Update: Aluminum Alloy Market

2020-12-15 14:21:18

In the past two weeks, the aluminum alloy price dropped about 5% from the peak. We expect that the market rate will stay at the current level within a +/-1.5% zone for one more week and, as the year-end peak production comes into the last month, the rate will further go down by 3-5% until the coming Feb. Due to the still high alloy price, most aluminum extrusion factories in China are unlikely to make a large stock during the long vacation.

(Weekly trend, left: Shanghai Future Index of Aluminum Alloy, right: LME3)

On the other hand, USD/RMB exchange rate seems to have passed the lowest trough. With the stabilized political situation in the States, the exchange rate should be able to go back to 6.70 in Jan.

(Weekly trend, off-shore USD/RMB exchange rate)

Yet, the international marine shipping cost still keeps rising due to the lack of containers in China. We think the situation will persist till the Chinese New Year. Many shipping companies are pouring resources into the delivery of empties containers back to China. The shipping cost may be alleviated from Feb on.