After experiencing rapid destocking in the past few years, LME aluminum stocks have been at a low level. At the end of September this year, stocks fell below 1 million tons for the first time since 2008, and began to slowly return to 1 million after mid-October. Tons above. Different from a few years ago, although the inventory is at a low level this year, the destocking speed is also moderated. From the inventory data, as of October 31, LME aluminum inventory was 1.05 million tons, which was only down from the beginning of this year. About 5%, significantly lower than the 46% and 26% slowdown in the same period of the past two years.

The main reason for the slow decline in overseas inventories is that this year’s global demand slowdown and China’s large exports have made up for some of the overseas supply gap. According to WBMS statistics, global demand in the first nine months of this year totaled 44.7 million tons, down 1.5% year-on-year. At the same time, the global aluminum supply gap also narrowed from 643,000 tons in August to 206,000 tons, while the annual supply gap in 2017 was 117.5. Ten thousand tons. Some time ago, Hydro also lowered its estimate of global aluminum demand growth in 2018. Of course, there must be a decline in China’s consumption, which accounts for 56% of global demand, but there is no doubt that consumption in overseas markets is weakening. The author believes that the slowdown in global demand is mainly due to the global macroeconomic instability and the weak global auto market.

Different from the domestic aluminum consumption structure, the automotive industry is the largest giant in aluminum consumption on a global scale. As the world’s largest auto market, China’s auto production and sales in January-October decreased by 0.4% and 0.1% respectively, showing the first negative growth this year. The negative growth for the whole year seems to be a foregone conclusion. The end of the tail has ended the “seven consecutive increases”, and Trump intends to use the knife on the import tariffs to make the US auto market worse. Recently, the US automaker GM, a large automaker, said that in response to the decline in traditional auto sales, the company was promoted. The transformation will close 7 production bases worldwide at the end of next year; while Europe is affected by the more stringent new emission test (WLTP), European car sales in September fell 24% year-on-year, although this round of sales fell sharply. The reason is that due to the new emission regulations, many unsuccessful vehicles have been banned and delayed delivery, but in the long run, car companies need to spend more money to develop new technologies to cope with higher standards. Undoubtedly will increase the production pressure of manufacturers and reduce the purchasing power of consumers, the European car market will continue to be under pressure in the next few years. The world’s top three auto markets have stalled, and the global auto market seems to have entered a cold winter.

In Japan, according to Japanese trader Marubeni, as of the end of October, aluminum stocks in Japan’s three major ports were 317,000 tons, an increase of 32% over the same period last year. Some time ago, it was also reported that some Japanese buyers agreed to raise the water price by US$103 per ton in the fourth quarter, down 22% from the previous quarter. The decline in the premium shows that the Japanese spot market is weak, and Japan is the largest aluminum importer in Asia. The country has, to a certain extent, reflected the consumption levels of other regions in Asia except China.

On the other hand, near the overseas Christmas holiday, coupled with the instability of the macro environment, many overseas traders said that their willingness to hold the spot is not large, which is another reason for the weakening demand.

Benefiting from the slowdown in demand and China’s strong exports, as of now, the spot trade premiums of the world’s major consumer destinations have fallen from the highs at the end of April, Europe, South Korea and Japan have all dropped to the lows of the year, including Europe and Japan. The high level of the month dropped by more than 50%, while the United States was limited by the impact of steel and aluminum tariffs. The spot premium was very limited, and its spot premium was still more than twice that of the beginning of the year. From the data released by LME, the LME warehouse inventory in the US only accounts for about 5.6% of the total LME inventory. Although there is a certain amount of invisible inventory in the country, as the world’s second largest aluminum consumer, the United States needs more imports. Sources of supply or restart of domestic idle capacity, but for a long time, excessive electricity costs have made local smelters uncompetitive, and steel and aluminum tariffs have increased import costs, and the continued decline in US spot premiums has been difficult.

Although global demand is slowing down, overseas supply shortages remain unchanged. According to CRU forecasts, the market deficit is expected to reach 1.77 million tons in 2018 due to continued demand growth and limited supply. Overseas markets still need more capacity to put into production, but under the current low aluminum prices, 40% of the global smelters are expected to be at a loss, which makes overseas new capacity limited, and Rusal has been affected by sanctions. Delayed the commissioning of the Taiset aluminium smelter in Siberia until 2020, and shut down the Nadvoitsky aluminium smelter in August, and recently announced that if the sanctions are not lifted, the Swedish Kubal smelter will be shut down, the smelter has been with the Nordic Power The exchange suspends trading. Although RUSAL sanctions have been repeatedly delayed, overseas traders also believe that the possibility of sanctions being lifted is too large, but according to foreign media reports, in the current situation, overseas traders are generally reluctant to hold RUSAL goods, which will surely Affecting RUSAL’s production plan for the coming year. In the future, overseas supply will remain limited, overseas inventories will continue to decline slowly, and the situation of internal tightness will continue.