Latest! The Eastern Theater Command announces military exercises! The United Nations speaks out, attacking UN peacekeeping forces may constitute a war crime! Achieving a new high in the stock market, what is the strong "confidence" of aluminum oxide?

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Eastern Theater Command conducts "Joint Sword-2024B" exercise

According to the official WeChat account of the Eastern Theater Command, on October 14th, Colonel Navy Li Xi, the spokesperson of the Eastern Theater Command, stated that on October 14th, the Chinese People's Liberation Army organized forces from the Eastern Theater Command, including the Army, Navy, Air Force, and Rocket Force, to conduct the "Joint Sword-2024B" exercise near the Taiwan Strait, northern Taiwan, southern Taiwan, and east of Taiwan. Ships and aircraft approached Taiwan from multiple directions, various military services jointly launched assaults, focusing on practicing subjects such as maritime and aerial combat readiness patrols, port and area control, sea and land strikes, and seizing comprehensive control, to test the joint combat capabilities of the theater forces.

Urgent! North Korea issues combat readiness instructions

According to CCTV International News, on October 13th, a spokesperson for the North Korean Ministry of Defense stated that "due to South Korea's provocative actions against the North Korean capital Pyongyang, the military tension is on the brink of escalation. The General Staff of the Korean People's Army issued combat readiness instructions on October 12th, requiring frontline artillery units of the Korean People's Army and units responsible for important firepower tasks to be fully prepared for comprehensive shooting. If South Korea's provocation is confirmed, it must be immediately struck, which may lead to an expansion of armed conflicts. All units must be fully prepared to respond to different developments."

The combat readiness instructions from the General Staff of the Korean People's Army stated that according to wartime staffing, 8 fully armed artillery brigades were to be put on "shooting standby status" by 20:00 local time on October 13th, completing all combat support work.

The General Staff instructed all levels of units and division teams to strengthen surveillance and vigilance, and the city of Pyongyang to enhance air defense surveillance readiness.

On the evening of October 11th, the North Korean Ministry of Foreign Affairs issued a statement condemning South Korean drones carrying anti-North Korea leaflets for violating North Korean airspace over Pyongyang, calling it a serious criminal act. The South Korean Ministry of National Defense immediately stated that the South Korean military did not launch drones into North Korea. A spokesperson for the South Korean Joint Chiefs of Staff stated that it is necessary to confirm whether the drones were launched by South Korean civilian groups.

On October 12th, North Korean Vice Minister of the Central Committee of the Workers' Party Kim Yo Jong made a statement, believing that "the South Korean military cannot shirk the responsibility as the main perpetrator or accomplice of a major sovereignty violation provocation." The statement said, "The airdrop of leaflets in the capital of another country itself will be regarded as a serious political provocation and violation of sovereignty, and the fact that drones were used to carry leaflets is the core of the seriousness of this incident. Citizens of one country using drones to violate the sovereignty of another country may lead to an armed conflict crisis, and the military's passive observation and complicity are tantamount to intentional acquiescence and collusion." The statement warned that if South Korean drones carrying anti-North Korea leaflets violate North Korean airspace again, North Korea will take "strong retaliatory response actions."

Guterres: Israeli attacks on UNIFIL troops may constitute war crimes CCTV News reported that on October 13th local time, Israeli Prime Minister Benjamin Netanyahu made a video speech calling on UN Secretary-General Guterres to withdraw the United Nations Interim Force in Lebanon (UNIFIL) from the conflict zone in southern Lebanon for the safety of the UNIFIL.

On October 13th local time, the spokesperson for the UN Secretary-General issued a statement regarding the United Nations Interim Force in Lebanon. The statement indicated that despite recent attacks on UN positions in southern Lebanon resulting in injuries to several peacekeepers, UNIFIL peacekeepers remain stationed at all positions. Secretary-General Guterres expressed respect for the dedication of UNIFIL personnel. Guterres reiterated the need to ensure the safety of UN personnel and property and to unconditionally respect the inviolability of the United Nations. In a concerning incident on the 13th, Israeli Defense Forces intentionally broke through the entrance of a UN compound. UNIFIL is continuously assessing and reviewing all factors, and the UN mission is taking all possible measures to ensure the protection of peacekeepers. The role and presence of UNIFIL in southern Lebanon are authorized by the UN Security Council. In this context, UNIFIL is committed to maintaining the ability to support a diplomatic solution based on Security Council Resolution 1701, which is the only possible way forward. Guterres emphasized that UN personnel must not be targeted, and attacks on peacekeepers violate international law and humanitarian law, potentially constituting war crimes. Guterres called on all parties, including the Israeli Defense Forces, to refrain from any actions that put UN peacekeepers at risk. Guterres took this opportunity to once again call for an end to hostilities and for the full implementation of UN Security Council Resolution 1701.

Strong Upsurge in Aluminum Oxide

After the National Day holiday, aluminum oxide futures prices continued to rebound strongly, hitting new highs since listing. As of the close on October 11th, the main 2411 contract for aluminum oxide rose by 7.53% for the week, and closed with another significant increase of 6.06% in the night session, closing at 4776 yuan/ton.

Since September, the supply of ore has been relatively tight, with limited release of aluminum oxide capacity and stable growth in demand. Tight supply of spot goods domestically and internationally has driven the continuous strengthening of aluminum oxide prices. As of now, the main aluminum oxide contract has risen by 42.65% year-to-date, leading the gains in base metals. Post-holiday, electrolytic aluminum also showed strength supported by a relatively warm macro environment and cost support, with the main 2411 contract rising by 1.78% last week, hitting a new high since June.

"In terms of the macro environment, US inflation is easing, job data is slowing down, and the probability of a rate cut by the Federal Reserve in November is increasing, leading to a rise in market risk appetite. Recently, China has been intensively releasing monetary and fiscal policies, increasing countercyclical adjustment efforts, major banks have lowered existing mortgage rates, unified to reduce the LPR by 30 basis points, boosting market confidence," said Xiao Yanli, a non-ferrous researcher at Zhonghui Futures.

Hu Pan, from the non-ferrous research team at Haitong Futures, told Futures Daily reporters that constraints on the supply side still exist. On one hand, there has been no significant progress in domestic ore production resumption, maintaining a relatively tight situation for domestic ores and a noticeable price increase. On the other hand, the rainy season still has some impact on the shipment of Guinean ores, with significant effects expected until around November, and the reduction in port ore inventories still remains significant At the same time, the disturbance news from the Guinean ore end has also increased the instability of imported ore. In terms of alumina production capacity, the weekly operating rate last week increased by 0.26 percentage points from the previous week to 84.61%. Some alumina production capacity in Shandong region that was under maintenance earlier has resumed production, but Guizhou, Shanxi, and other areas are still affected by maintenance and technological upgrades. Weiqiao's 1 million tons of alumina transfer capacity has been put into operation, but the output release is expected to be at the end of this month or in November. Recently, there has been a small increase in downstream electrolytic aluminum. Following the resumption of production of technological upgrade projects in Guizhou and Sichuan regions, Xinfadi Xinjiang's 550,000 tons of electrolytic aluminum production capacity has also been put into operation, the expectation of reduced production of electrolytic aluminum in Yunnan during the autumn and winter seasons has fallen through, and there are signs of opening in the export window, exacerbating the tight supply situation in the spot market. Alumina inventory continues to remain low. According to Steelhome data, the total national alumina inventory last week was 3.956 million tons, a decrease of 17,000 tons from the previous period.

The tight supply of bauxite has intensified, domestic bauxite resources are scarce, and China's dependence on imported bauxite exceeds 70%, with Guinea being the largest source of bauxite for China. Earlier, due to the rainy season in Guinea, shipments were affected, and disturbances have increased recently. According to SMM news, on October 11th, Emirates Global Aluminium announced that its subsidiary Guinea Alumina Corporation (GAC) has suspended the export of bauxite, with GAC exporting 14.1 million tons of bauxite in 2023. In addition, overseas alumina plants have reduced production, leading to a decrease in supply, an increase in overseas alumina prices, the closure of import windows, and a continuous decrease in alumina imports since the second quarter.

As of the end of September, the operating capacity of domestic electrolytic aluminum reached 43.51 million tons, with the operating rate of electrolytic aluminum plants exceeding 95%. In September, domestic electrolytic aluminum production increased by 1.45% year-on-year. Yunnan region's electrolytic aluminum maintains full production, driving an increase in alumina demand. In September, alumina production was 6.913 million tons, an increase of 2.69% year-on-year. In terms of costs, according to SMM data, as of October 10th, the average fully loaded cost of China's electrolytic aluminum industry was 18,076.53 yuan/ton, at a historically high level, with subsequent support for prices as hydropower and thermal power costs rise with the arrival of Yunnan's dry season and the northern winter heating season.

In terms of inventory, as of October 10th, the inventory of electrolytic aluminum ingots in major consumption areas in China was 677,000 tons, an increase of 19,000 tons from a week ago; the inventory of aluminum rods in major consumption areas in China was 134,700 tons, an increase of 25,700 tons from a week ago. In terms of spot market, on October 10th, due to the tight supply of overseas bauxite coupled with the approach of winter storage, the domestic alumina spot market was active, with some enterprises with low inventory in urgent need purchasing tens of thousands of tons of alumina from Shanxi region through traders, with the ex-factory transaction price at 4,340 yuan/ton.

Xiao Yanli introduced that in September, the comprehensive PMI index of China's aluminum processing industry recorded 61.7%, an increase of 18.1 percentage points from the previous month, returning above the boom-bust line for the first time since May. With the strong season of "Golden September and Silver October", downstream rod mills and other production lines have completed maintenance and resumed production, downstream manufacturers and traders are actively replenishing inventory. In terms of end consumption, Guangzhou has completely lifted all real estate purchase restrictions, Shanghai has issued seven real estate policies, real estate transactions in many places have picked up, and consumption in automobiles and home appliances has shown resilience. In the field of electricity, the deepening substitution of aluminum for copper continues, aluminum plates, strips, and foils Industrial aluminum profile consumption is recovering ahead of schedule.

In terms of electrolytic aluminum, the production capacity in Guizhou and Sichuan provinces continues to increase recently, and Xinjiang Zhundong's 550,000-ton production capacity has also been put into operation. In addition, Yunnan has sufficient hydroelectric power, and it is expected that Yunnan's power grid will not implement power restrictions on electrolytic aluminum enterprises this winter and spring, as the earlier expectations of production restrictions have basically fallen through. Demand is still in the seasonal peak season, with major sectors maintaining stable production levels. Last week, there was a slight destocking, but spot prices are still at a discount.

Regarding the future trends of alumina and electrolytic aluminum, Xiao Yanli believes that, macroeconomically, simultaneous interest rate cuts at home and abroad, synchronized restocking cycles between China and the U.S., intensified counter-cyclical adjustments in domestic monetary and fiscal policies, and improved market confidence. Fundamentally, there is a supply-demand mismatch, with increased overseas disturbances in bauxite supply. In the peak consumption season of "Golden September and Silver October," aluminum inventory destocking is smooth, and costs provide support for aluminum prices. Expectations of stabilization in the end-market real estate sector, along with steady demand in the automotive and power sectors. In the short term, alumina and electrolytic aluminum are expected to rise together, with alumina showing greater elasticity. Caution is advised against the negative feedback effects of high aluminum prices on demand, as well as the potential reversal of fundamentals due to supply-demand tightening in November. In addition, with the approaching U.S. election and escalating Middle East geopolitical conflicts, "black swan" events may increase market volatility. In the short term, macroeconomic and fundamental resonance, alumina and electrolytic aluminum are expected to fluctuate upwards, with a bias towards rising prices and a need to guard against overly optimistic sentiment that may overextend future gains.

Hu Pan believes that current constraints on the supply side still exist, while the rigidity of unfulfilled production cuts on the demand side makes short-term loosening difficult. A strong real logic is expected until a clear inflection point in inventory appears, with a bias towards strength. Expectations of concentrated production in the later part of the fourth quarter may exert downward pressure on forward contracts, but the probability of reduced electrolytic aluminum production in Yunnan is low, and the excess supply of alumina may be limited. In the fourth quarter, attention should be paid to inventory inflection points and downstream inventory situations. In terms of electrolytic aluminum, short-term macroeconomic influences remain significant, with clear cost support. However, the drag on aluminum prices from unmet expectations of reduced supply may have some impact. Optimistic demand expectations under high aluminum prices still need to be validated, with a focus on inventory performance and macroeconomic influences in the future