Will China 1050 aluminum circle price keep rising

In the past months China aluminium price has kept climbing, including the 1050 aluminum circle price, since raw material price plays a crucial role in aluminium circle production cost. Then will the 1050 circle price continue rising in the future months? The answer is negative, for the factors supporting the high price will eventually be weakened.

The factors that drove aluminum circle price to continue to rise from 2020 to 2021 include: demand improvement brought about by economic recovery, investment demand brought about by flooding of liquidity, rising costs caused by rising alumina overseas, and domestic environmental protection and carbon emission policies affecting production capacity. These factors combined created a new record in aluminium prices of the past 9 years.

The rising trend, however, will not continue. There are three reasons. First, the current price of electrolytic aluminum has far exceeded the production cost, and the smelter has a huge profit per ton of aluminum. Second, the market has fully reflected the rising cost and the high ceiling of production capacity brought about by “carbon neutrality” and “carbon peaking”. “The benefits of “carbon peak” are long-term logic, and short-term market cannot be traded with long-term logic; Third, demand is suppressed by high aluminum prices, and real estate regulation continues to increase and the automotive industry is falling quarter-on-quarter to affect the peak season. Therefore, the 1050 aluminum circle price will drop eventually.