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[monthly outlook] Shanghai Aluminum continues to refresh its high position in May and remains firmly in the third place. I will pay attention to the possibility that the fundamentals may weaken marginally next month.
May 30,2020 17:01CST
The content below was translated by Tencent automatically for reference.

SMM5 March 30: the main force of Shanghai Aluminum continued to be strong in May, constantly fluctuating and rising. The 2007 contract of Shanghai Aluminum Company has repeatedly refreshed its previous high since it reached the Wansan pass at the end of the 27th. It climbed all the way to 13260 yuan / ton on Friday and refreshed a two-month high of more than two months. As of the daytime close, it rose more than 0.8%, and the monthly K-line rose more than 700 yuan / ton.

From a fundamental point of view, the center of gravity of Shanghai aluminum continues to move upward this month, mainly due to the strong superposition of downstream consumption.

From the inventory point of view: according to SMM statistics electrolytic aluminum storage reached a high of 1.676 million tons on April 7, since April 9 entered the de-storage cycle, after a month and a half to the warehouse 777000 tons to the current 893000 tons, a decline of nearly half of the year's high, of which the South China Sea, Wuxi, Gongyi three major consumption low contribution of the main decline, the current stock is basically flat in the year after the return of inventory level. To maintain the storage, first, the demand for aluminum water around the electrolytic aluminum plant increases, and the proportion of ingots decreases, so that the shipping volume is reduced, so the arrival of goods in the place of consumption is also on the low side; second, the downstream demand is still strong, and the consumption of some substitutes for waste aluminum is still maintained. Strong stock removal of aluminum ingots gives the market strong confidence.

On the other hand, the consumption performance in the lower reaches of May was OK, and the operating rate of aluminum profiles and aluminum plate, strip and foil in the lower reaches remained relatively high for eight consecutive weeks, with hot plates such as construction and medicine driving aluminum consumption. consumption in automobile, home appliances and electronics also shows signs of picking up.

Shanghai Aluminum has a strong performance in May, can it continue to rise in June?

SMM believes that in the macro marginal recovery, to strong superimposed consumption is OK, the market spot circulation is tight, the short-term force is not strong, is expected to be strong shock in the short term.

However, from a long-term point of view, the fundamentals have a weakening trend: first, according to the feedback from the warehouse, the weekly decline in inventory will be narrowed; second, the production and maintenance capacity of the previous period is gradually recovering, and the new production capacity is beginning to be put into operation as planned. coupled with the continuous pressure from imported aluminum ingots, the supply side should be under long-term pressure. third, from the consumer side, June is also about to enter the traditional off-season of the aluminum downstream industry. Coupled with the impact of this year's epidemic, most enterprises expect their operations from June to August to be lower than those of the same period last year. Therefore, on the whole, aluminum prices are expected to remain strong and volatile in the first half of June, and high levels in the second half of the month are more likely to fall. We need to continue to pay attention to the changes in the circulation of the spot market and warehouse receipt inventory before the delivery of futures in that month. Beware of a sharp reduction in short positions in the second half of last year that pushed up the contract aluminum price of that month.

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