LME Sanctions Influence and European Electrolytic Aluminum Production Situation
Although the electrolytic aluminum extrusion factory in Europe has reduced production on a large scale due to the sharp rise in natural gas prices, it can be seen that natural gas is not the main source of electricity of the European electrolytic aluminum factory, which leads to the increase in electricity prices caused by the rise in natural gas prices. Therefore, when Aluminium Profile judging the future production reduction expectations, we cannot predict through the proportion of energy, but we need to judge through the power contracts of various smelters.
Overall, through analysis of the sanctions plan and the operating situation of European smelting factories, we can draw the following conclusions:
1. Under the circumstances of existing smelting costs, there is still a possibility of reducing production in Europe, with room to reduce production to about 600,000 tons. (profitable)
2. Under the existing smelting costs overseas, about $ 2100 is supported by aluminum prices. (profitable)
3. In the case of high inflation overseas, comprehensive sanctions on Russia's aluminum improving will cause inflation to worsen, which will in turn stimulate the expectations of the Fed's interest rate hikes, and then suppress the price of commodity. Therefore, the increase in aluminum prices after sanctions must not be highly expected. (Likong)
4. Sanctions on Russian aluminium extruded profiles may stimulate aluminum exports that stimulate the domestic market. However, the electrolytic aluminum that originally supplied to Europe and the United States may flow to the domestic market (accounting for 47%), which will have a great impact on the domestic market supply and demand in the future. Therefore, overall, if the sanctions are officially implemented, it will lead to the situation of aluminum markets with strong external and internal and weakness.