[summary of SMM Aluminium Internal Morning meeting] Alumina needs to be raised just before the festival & above the rise and fall line of PMI in aluminum processing industry in April

5. 6 minutes of the internal morning meeting of SMM aluminum

Disk: domestic May Day holiday period (5.1-5.5), normal trading in overseas markets. In three trading days, the dollar rose against most currencies, the US index closed at 99.977 points, as of 21:00 Beijing time on the 5th, the US index closed at 99.814 points; Lun aluminum performance first suppressed and then rose to 1472 US dollars / ton, the Shanghai-London ratio once expanded to 8.6, followed by other outer plate metal slowly repair decline, as of 21:00 Beijing time, Lun aluminum closed at 1481.5 US dollars / ton. Macro: (1) on the macro side, on May 1, major oil producers such as Saudi Arabia and Russia will jointly reduce production by 9.7 million barrels per day in accordance with the OPEC+ agreement, and the first round of production reduction will last for two months. As a result, international crude oil futures have rebounded strongly, with US oil surging more than 20% and oil distribution breaking through the US $30 mark, which has also led to a general rise in non-ferrous outer plates (Lido). (2) in terms of epidemic situation, more than half of the states in the United States are gradually unsealed, and about 15 European countries plan to introduce unsealing measures to boost market confidence, but the epidemic has rebounded after loosening isolation in some parts of the United States, and investors have expressed concern. Asian countries such as India, Singapore, Japan and South Korea have extended and strengthened epidemic prevention and control measures (bad weather); (3) in terms of data, the manufacturing PMI36.1, of ISM manufacturing PMI41.5,Markit in the United States in April all reached the lowest level since 2009; the manufacturing PMI34.5, in Germany shrank at an all-time high in April; the manufacturing PMI33.4, in the euro area fell by the largest rate in 23 years in April; the monthly factory order rate in the United States in March was-10.3% (bearish). (4) overseas, the United Kingdom will begin two weeks of trade negotiations with the United States on Tuesday; the 2020 Dubai World Expo will be postponed to October 2021 (negative); the European Central Bank will issue an interest rate resolution to keep the three key interest rates unchanged (neutral); Fed Brad said the Fed would not raise interest rates until the economic data were good enough. Kaplan said GDP could shrink by 30 per cent in the second quarter from a year earlier and 4.5 per cent to 5 per cent for the whole year. Trump said he would release a report on the origin of the new crown virus in the near future (neutral). (5) on the domestic side, the Finance Commission of the State Council held a meeting to hear a report on the progress of supporting economic recovery, speeding up the reform and development of small and medium-sized banks, and cracking down on capital market fraud. From May 2, all provinces in the country have an emergency response level of level II or below (Lido); According to the China Electronic and Information Industry Development Research Institute, the overall retail scale of China's home appliance market in the first quarter was 120.4 billion yuan, down significantly from the same period last year. Fundamentals: (1) in bauxite, by the end of April, ores in the northern region had fallen, and the tax-free prices of ores with Al-Si ratio of 5 in Shanxi Province were 350-380 yuan / ton, and those with Al-Si ratio of 5 in Henan were 330-370 yuan / ton. It is expected that domestic ore prices in May will fluctuate more frequently according to the demand of various factories (negative); (2) in terms of alumina, the domestic spot market was active the day before the festival, the transaction and bargaining center of gravity in the northern region rose to 2180-2200 yuan / ton, and the transaction and bargaining center in southwest China rose to 2180-2200 yuan / ton. The purchasing scale of the electrolytic aluminum plant has just been expanded, and the price of alumina is expected to maintain a small upward trend in the short term. (3) in the aspect of electrolytic aluminum, the current SMM statistics show that the annualized operating capacity of domestic electrolytic aluminum is 36.2 million tons. With the rebound of aluminum price, it is difficult to reduce production again, and the rate of new recovery will be restored (negative); (4) inventory. April 30, SMM statistics of domestic electrolytic aluminum social inventory of 1.204 million tons, weekly to the warehouse of 155000 tons, a new record high; (5) on the demand side, one week before the festival, SMM statistics showed that the operating rate of domestic medium and large downstream processing enterprises decreased slightly compared with the previous week, and the bright spot of consumption was concentrated in the construction and pharmaceutical sectors. There was an obvious product structure adjustment in strip foil and primary alloys, and the operating rate of building materials remained high, while the operating rate of recycled aluminum industry fell slightly due to weak terminals (Lido). In April, SMM aluminum processing industry PMI 55.9%, down 7.7% month-on-month, of which aluminum plate, cable and building materials industry PMI expansion range, aluminum industrial materials, primary, regeneration and foil PMI shrink space (Lido). Spot: on April 30, Shanghai Wuxi area holder quotation between 1278012800 yuan / ton, the spot price rose 20 yuan / ton compared with the previous day, the surface rising water concentrated in 60-80 yuan / ton, 11: 00 after the market transaction heat dropped obviously, the rising water narrowed slightly. May Day before the last spot trading day because most of the traders close accounts or prepare for a holiday, and a large account has not announced the procurement plan, the market transaction atmosphere is not as good as the previous two days, buyers and sellers generally deal. Downstream part of the stock, the enthusiasm for receiving goods is not obvious. East China as a whole, the deal is OK.

Summary: the domestic epidemic situation has been basically controlled, the policy side released more favorable, the macro atmosphere warmed; from a fundamental point of view, the short-term supply side did not obviously lift, and the aluminum ingot spot market arrived less, downstream demand is still relatively strong, liquidity is tight, it is expected that a strong shock pattern of spot rising water and futures aluminum prices will be maintained one to two weeks after the festival, and the back structure will remain strong in recent months before the exchange month, and the price difference is likely to be further widened. It is necessary to pay continuous attention to the impact of long short post-holiday mood changes and crude oil news changes on internal and external aluminum prices.

(SMM Li Hao 021-51666863)