[SMM Analysis] Shanghai Aluminum: when is it appropriate for bulls to enter the market?

Big news came out over the weekend, confirming that China and the United States will no longer impose new tariffs, and the macro atmosphere has improved marginally, but after two days of observation, Shanghai Aluminum has not shown strength. Take the Shanghai aluminum main company 1908 contract as an example, after Monday morning trading, the bulls were affected by the overnight macro news, increased their positions by nearly 1,000 hands within 10 minutes, and briefly pushed up the aluminum price by 13855 yuan / ton, but then it was again difficult to go up. open high and go low, the overall trend within two days fell, low hit 13630 yuan / ton.

Many friends immediately asked, whether the price of aluminum can still go up, if long now is appropriate to enter the market?

The overall trend chart of the 1908 contract of Shanghai Aluminum Company since the opening of trading on Monday.

SMM believes that bulls are at greater risk of entering the market at this time. We have mentioned in a number of articles, now that the fundamentals of aluminum prices are too empty, the main suppression factors are the weakening of consumption and the downward movement of costs. As early as May, SMM affirmed that consumption in the lower reaches of July may weaken. After entering July this month, SMM found downstream through research that orders for aluminum extrusion and rolling plants have weakened month by month, and the traditional seasonal off-season may come as scheduled in July / August. In addition, alumina prices are also in the downward trend of concussion. It is expected that there will be a sharp rebound in July. As far as the inventory end is concerned, the pre-SMM statistics show that electrolytic aluminum stocks go to a larger extent. It has even reached the pace of 70,000 tons compared with the previous month in two weeks, but so far this month, July 1 has dropped by only 10,000 tons from June 27, which, in addition to an increase in the arrival of goods, has also hinted at a weakening in consumption. inventory is also likely to accumulate slightly as consumption continues to fall. In this way, aluminum prices have a greater probability of falling back in the long run, so it is not appropriate to buy more at this time.

When is the right time for so many heads to enter? SMM believes that in the medium term, excluding sudden disturbance, when the aluminum price is running at 13500 to 13600 yuan / ton, it can wait for more than one layout. SMM will also continue to pay attention to the market, according to the fundamentals, news changes in time to adjust the view of aluminum prices.