SMM12, March 8: recently, due to the low price of aluminum, some aluminum plants are in a state of loss or on the verge of loss, resulting in a gradual increase in production capacity of aluminum plants. According to SMM research, the current production capacity has been reduced by more than 2.6 million tons. SMM statistics show that on December 17, domestic spot electrolytic aluminum stocks fell another 18000 tons to 1.277 million tons compared with last Thursday, the supply side is in a tight situation. On the other hand, the consumption of aluminum ingots downstream has not shown a trend of collapse recently, and the market is looking forward to the release of policies to boost the economy next year at the Central Economic work Conference this week. Shanghai aluminum prices rose strongly yesterday, breaking through the concussion period since December 10. Today continued yesterday's rally, by the end of the day, Shanghai Aluminum 1902 contract closed 0.7% higher at 13740 yuan / ton.
Will the surge in LME aluminum stocks dampen aluminum prices? SMM believes that the significant increase in LME aluminum stocks may be the main reason:
1. After the decline of overseas rising water, the holder began to focus on the delivery of positions, the overseas hidden inventory already exists, and now it is only a explicit process, which has a limited impact on the price.
2. Under the background of weakening overseas consumption and raising interest rates in the United States, liquidity will be tightened and the demand for registered warehouse receipt pledge will increase.
Several times before the centralized delivery of positions, disk feedback is not obvious, aluminum prices are expected to have little response to the inventory increase. In the context of the domestic aluminum price rebound reflects the production reduction, the inventory time is prolonged, some short positions leave the market, and the price is supported.
Exclusive interview with SMM
Yongan Futures Jiang Xincheng:
Recently, the trend of Shanghai Aluminum is stable and strong, mainly due to the impact of macro and news. First, an economic work conference will be held this week, and the market is expected to introduce policies to reverse the weak macro situation in the later period. Second, the Association recently convened a meeting of the aluminum plant, in the current aluminum plant in the context of large losses, the market is looking forward to greater production reduction efforts. On the cost side, it is still a game between bauxite prices and alumina costs, while the supply and demand side has to face the cumulative market in the first quarter. Overall, if this week's meeting did not bring greater industry production reduction, electrolytic aluminum market is still more difficult to reverse, short-term rebound space is limited.
Guangzhou Futures Li Jun:
Looking to the future, as the electrolytic aluminum industry continues to lose money, and the loss is relatively large, some smelters have stopped production one after another, and the willingness of enterprises to resume production and put into production has weakened, resulting in a continued decline in inventory, and the price of raw materials has not dropped significantly. The cost side will still form a certain support for aluminum prices, but it is currently in the off-season of consumption, and the boost to aluminum prices on the demand side is limited. Shanghai Aluminum is expected to fluctuate in the range of 13500 to 14000 yuan per ton.
Guangfa Futures Shi Jun:
A short-term domestic economic work conference will be held soon, and a series of guiding opinions will be issued on economic work next year. According to the instructions of the standing Committee of the previous National people's Congress, Liuzhang may promote domestic policy to stimulate domestic demand, and market sentiment will rise. However, as far as aluminum fundamentals are concerned, the price of aluminum oxide is weak, the short-term operation is weak, the cost of electrolytic aluminum has fallen slightly, the demand for electrolytic aluminum has been superimposed in the off-season, and the fluctuation of aluminum price has intensified, but the upward power is insufficient.