Analysis of the Later Trend of Aluminum Prices

Since the National Day holiday, international copper prices have reached new heights. Based on the linkage of basic metals, the fund has also ignored the aluminum market, and Lunco launched a relatively strong rally. Before the holiday, domestic aluminum prices did not care too much about the strength of Lon Aluminium, and they still managed to maintain a weak oscillator. However, the prices of spot prices both rose with the spot prices at the beginning of this week. The domestic market has begun to enter the traditional peak season for consumption. It is expected that with the growth of consumption, the current price trend of domestic aluminum ingots will gradually strengthen.

Growth in production and demand

The increase in domestic production and the continued decline in exports have been the main reason for the pessimism that funds do not dare to do more. According to data from the Non-Ferrous Metals Industry Association, China's aluminum ingot production maintained strong growth momentum in August this year, with output of 687,000 tons in August and cumulative output of 5.05 million tons from January to August. Exports continued to decrease, with only 16,700 tons in August.

So where did China's aluminum ingots go? Although the domestic reportable stocks have gradually increased since mid-June, the stocks totaled only 62,309 tons at the end of August and the beginning of September. As of the previous week, the stocks were only 65,868 tons. At present, the traffic in the country is unimpeded, and it is unlikely that manufacturers will stock a large number of stocks. The answer is that domestic consumption is also accelerating. From the apparent consumption of aluminum in China during the first eight months of this year (apparent consumption = output + net imports +/- inventory changes), monthly consumption and output have shown rapid growth since 2005, according to data from Macqua rie. From January to August of 2005, China’s apparent consumption increased by 13% compared with the previous year. At the same time, as a downstream production industry for aluminum ingots, China’s aluminum output also maintained rapid growth. In August, China's aluminum production reached 554,000 tons, an increase of 29.83% over the same period of last year; from January to August, the cumulative output reached 3.72 million tons.

Since there is no official consumption data published in the country, the grasp of consumption generally directly obtains information from the exchangeable stock changes of the exchange and spot price movements. In mid-September domestic stocks began to gradually reduce, last Friday was a huge reduction of more than 14,000 tons, of which Shanghai and Wuxi decreased by a larger margin, the market will be attributed to the company due to the library reserve. However, the spot price in Guangdong, which is the processing and distributing center for aluminum materials, is currently the highest in yuan/ton. However, the first increase in inventory indicates that in addition to the reasons for preparing the database for the inventory, it may be more understood as the arrival of the busy season. Spot consumption has started.

Imported alumina prices continue to rise

Domestic alumina demand, insufficient production, declining imports, and busy preparation of warehouses before the festival led to continued increases in the prices of domestically-imported alumina ports. Last week, alumina prices in northern ports (such as Lianyungang and Tianjin) were roughly in the 5400-5450 region. Compared with the southern ports, the quotation is slightly higher; the quotation of southern ports (Zhanjiang, etc.) is maintained at 5200-5300; due to the current tight supply of ports, the quotation is more confusing, and some port quotation is even as high as 5700-5800. Large domestic traders are very cautious at the high price and domestic and foreign alumina expansion at the end of the year. This leads to the short-term vicious circle of higher prices, fewer imports, fewer imports, tighter supply and demand, and continued price increases. . According to spot dealers, there may be a batch of imported alumina arriving in Hong Kong in recent days. However, considering the customs declaration factors, it is estimated that they cannot be sold before the holiday. Therefore, short-term domestic supply and demand of alumina still can not be effectively alleviated, import prices will continue to be high; the latter trend will need to pay close attention to the production of the China Aluminum expansion project after October, port imports and inventory changes.

The current import alumina quotation and Chinalco's domestic alumina price 4330 yuan / ton gap has widened, Chinalco will be increasing prices rumors are also increasingly strong. Although in the beginning of September China Aluminum spokesman said that only when the price of aluminum ingots rose to 17,000 yuan / ton will consider increasing the price of alumina. However, the current tight supply of alumina cannot be eased and the spot consumption of aluminum ingots has started to start. Once the import prices are still high and the spot prices of aluminum ingots are rising, it is not impossible for Chinalco to increase the domestic alumina prices. The increase in the price of alumina will certainly provide another bullish trend for the domestic price of aluminum ingots.

International aluminum market fundamentals turn better

Although this wave of international aluminum price rally is more affected by the rise in prices of peripheral commodities, which has attracted funds to make a market, the international aluminum market itself has undergone some positive changes since then: output has been declining and demand has been rising. According to the statistics of the International Aluminum Association (IAI), the daily output of the world (excluding China) slightly declined to 64,700 tons in August, which was lower than the 64,800 tons in July. On the demand side, a series of economic data released recently by the United States showed strong performance. In particular, the North American new orders index (excluding seasonally volatile cans) has been falling sharply in the previous period. In August, it only fell 0.6% year-on-year. In July, the index fell 9.3% year-on-year. The fundamentals will continue to provide ample support for the further rise in international aluminum prices.

Overall, the fundamental situation of domestic aluminum prices has begun to gradually improve, domestic consumption has started signs. With this good expectation, the popularity of the Shanghai aluminum market is gradually recovering. Starting from last Monday, Shanghai Aluminum’s contracts have increased their positions and increased their total positions in addition to the spot monthly contract. However, it is expected that it will be difficult to step out of the unilateral rally in the short term, and the pressure on the technical side is also heavy at the same time. On the contrary, domestic spot prices are more likely to be boosted by consumption. It is expected that the aluminum prices in the domestic period will gradually turn stronger in the later period, and the trend of futures prices will be more dominated by spot prices.

Shen Cuiqiang finishing