SHANGHAI, Sep 2 (SMM) - Due to the high temperature weather, Sichuan, Jiangsu, Anhui and other places introduced power rationing policy in mid-August. By the end of August, the influence of high temperature eased, and Sichuan and other areas saw rainfall. The power supply began to recover. According to SMM research, due to the supply shortage, Sichuan province strictly controlled the power consumption of industry sector. Jiangsu also introduced industrial power limitation measures, which affected the production of some downstream enterprises. Enterprises in Anhui implemented off-peak power consumption scheme. Amid the unfavourable macro factors and relatively weak downstream demand, the market pays a lot of attention to the impact of power rationing on raw material procurement, output and orders of aluminium extruders.

The macro sentiment was relatively poor amid the expectation of interest rate hike. Although the ADP employment data was lower than expected, Fed’s Hawkish remarks remained. Therefore, the non-ferrous metals prices fell intensively. In addition, with the ease of power rationing in Sichuan, the production of refined aluminium resumed, and the supply is expected to decline less, hence the SHFE aluminium prices fell more obviously.

According to SMM research, the overall aluminium consumption from new energy vehicles sector, lightweight automobile sector and photovoltaic sector continued to increase, while that from traditional building extrusion sector was relatively poor this year. Enterprises in Sichuan were significantly affected by the power rationing. Some aluminium extruders in Sichuan may digest their aluminium rod inventory as the molten aluminium was in shortage due to the power rationing. Despite the approaching traditional peak season, enterprises lacking stable long-term orders are not optimistic about the future market. Enterprises with stable long-term orders pay more attention to the correction of aluminium prices, and purchase on dips to increase profits. Overall, SMM believes that aluminium prices may correct due to macro impact and energy shortage. SMM will continue to pay attention to the recovery of orders of aluminium extruders and the refined aluminium production in September.

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