Aluminum prices fluctuate horizontally
| Gamma-PGA (gamma polyglutamic acid) |
Aluminum prices have fluctuated horizontally this week. According to the Commodity Market Analysis System of Shengyi Society, as of June 6, 2025, the average price of aluminum ingots in the East China market in China was 20246.67 yuan/ton, a decrease of 0.28% from the market average price of 20303.33 yuan/ton on June 1.
Fundamental Overview
Currently in the off-season of demand, downstream operating rates are low, and the supply and demand of aluminum ingots are relatively weak. On the supply side, the production capacity of electrolytic aluminum has increased, with a slight increase in output, and the import volume remains high, resulting in increased supply pressure. On the demand side, during the off-season of traditional consumption, the demand for building profiles, home appliances, and other products is relatively weak. Although new energy vehicles can drive some of the demand, the photovoltaic market has experienced a decline in production and overall demand growth is weak. On the cost side, there is a possibility of a decline in alumina prices, and the cost center of electrolytic aluminum is shifting downwards, which weakens the support for aluminum prices.
However, according to social inventory data, the current social inventory of aluminum ingots is relatively low and in a state of destocking. As of June 5th, the inventory of electrolytic aluminum ingots in mainstream consumer areas in China was 504000 tons, a decrease of 15000 tons from the beginning of this week and a decrease of 7000 tons from last Thursday; A decrease of 49000 tons compared to May 22nd. Meanwhile, during the export window period after tariff adjustments in June, the rush to export behavior will also provide some support for aluminum prices.
Macro news aspect
1. The United States imposes a 50% tariff on imported aluminum ingots and their derivatives
On June 3, 2025 local time, US President Trump signed the latest executive order imposing a 50% tariff on imported aluminum ingots and their derivatives starting from 00:01 Eastern Time on June 4, doubling the previously uniform 25% tax rate.
In this executive order, the UK retains a 25% tax rate on imported aluminum ingots and derivatives, in line with the Economic Prosperity Agreement reached between the US and UK in May. If the UK fails to fulfill its obligations, its tax rate can be raised as early as July 9th. In addition, aluminum ingots produced domestically in the United States are exempt from tariffs, meaning that products melted, poured, or cast in the United States can still enjoy 0% tariffs even if subsequent processing is carried out overseas. However, aluminum products sourced from Russia are still subject to a 200% import tax, whether it is primary aluminum originating from Russia or goods cast in Russia, as long as either condition is met.
2. The European Central Bank has cut interest rates 8 times to 2%
On June 5th local time, the European Central Bank announced a 25 basis point reduction in each of its three key interest rates, including the deposit mechanism rate from 2.25% to 2%, the main refinancing rate from 2.4% to 2.15%, and the marginal lending rate from 2.65% to 2.4%. This is the eighth interest rate cut since June last year, which is in line with market expectations.
The European Central Bank’s interest rate cut this time is mainly due to the overall inflation level in the eurozone being close to the central bank’s mid-term target of 2%, and the weakening external economic environment putting pressure on growth prospects. Data shows that the year-on-year growth rate of the Eurozone’s May adjusted CPI dropped to 1.9%, marking the first time since September 2024 that it has fallen below 2%; Core inflation has also significantly slowed down to 2.3%, hitting a new low since January 2022.
European Central Bank President Lagarde stated at a press conference that after the 25 basis point reduction, the ECB is in a good position, while also stating that the ‘monetary policy cycle is coming to an end’. The market generally predicts that the European Central Bank will temporarily keep interest rates unchanged at its July meeting and may cut rates again in September.
3. The phone call between Chinese and American leaders conveys a positive signal of easing trade frictions
On the evening of June 5th, the leaders of China and the United States had a phone call, emphasizing the importance of bilateral relations, affirming the achievements of economic and trade talks, and urging the implementation of economic and trade consensus. After the Geneva talks, China seriously implemented the agreement, and the United States should take a pragmatic view of the progress and revoke the negative measures taken against China. The two heads of state agreed that their teams will continue to implement the Geneva Consensus and hold a new round of talks as soon as possible.
4. Non farm payroll data for the United States is about to be released
Future forecast
On the supply side, the production capacity of electrolytic aluminum has increased, with a slight increase in output, and the import volume remains high, resulting in increased supply pressure. On the demand side, during the off-season of traditional consumption, the demand for building profiles, home appliances, and other products is relatively weak. Although new energy vehicles can drive some of the demand, the photovoltaic market has experienced a decline in production and overall demand growth is weak. On the cost side, there is a possibility of a decline in alumina prices, and the cost center of electrolytic aluminum is shifting downwards, which weakens the support for aluminum prices.
However, during the export window period after tariff adjustment in June, the rush to export will provide some support for aluminum prices. In terms of inventory, the social inventory of aluminum ingots is expected to drop to over 400000 tons in June and remain low. The overall inventory level in the second half of the year is relatively low, which will provide some support for aluminum prices.
Overall, it is expected that aluminum prices will show a weak and volatile trend in June.
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