[SMM analysis] low inventory is tight and short-term aluminum price volatility is strong.

SMM6 March 16 News: the recent Shanghai Aluminum main 2007 contract performance high shock, today changed yesterday's decline, the intraday high of 13910 yuan / ton basically recovered all the decline since February 3 this year. Why the recent trend is stronger?

Inventories are at a relatively low level. As of June 15, SMM statistics showed that the country's mainstream consumption sites totaled 767000 tons, which was 320000 tons lower than that in the same period last year, and 900000 tons had been removed from the high point of 1.667 million tons in the middle of the year, and the proportion of destocking was close to 54 percent.

The downstream demand is OK. With regard to SMM, we have learned that the current market performance of aluminum profiles and aluminum foil is relatively good, with production schedules ranging from two weeks to two months, orders are relatively abundant, short-term operating rates remain high, and overall downstream consumption of aluminum has not rapidly turned into a weak state.

Under the background of continuous destocking and acceptable consumption, the spot circulation in the market is tight, and it is difficult for short-term inventory to achieve the expectation of accumulating inventory. From a fundamental point of view, the negative factors have not yet been fully released.

At the same time, from the perspective of the market, in the case of futures holding more than 130000 positions (equivalent to more than 650000 tons of warehouse receipt brand volume), there is the possibility that it will be difficult for bears to deliver in the future. 2007 contracts have been showing a trend of short positions reduction since last Wednesday, and it is expected that short positions (especially hedging short positions) will continue to occur in the short term.

To sum up, we expect aluminum prices to maintain a strong volatility trend in the short term, and the bearish points described in the previous period may not be gradually reflected until late June, so it is not recommended for short-term operators to go short unilaterally.

Risk hint: now smelting profits return to a more satisfactory situation, stimulating the launch of new capacity.

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