[SMM monthly special topic] short-term off-season effect or lag can still be expected in medium-term gold, silver and silver

SMM9 March 1 News: August Shanghai L2010 contract as a whole showed a first decline and then rise, up and down a narrow range of fluctuations. Compared with July, there is still a weak upward trend, indicating that the off-season effect is not obvious. As of the last trading day of August, it closed at 14540, a monthly increase of 0.62%.

On the raw material side, since the third quarter of last year, the SMM alumina price weighted index has failed to return to the higher position of more than 2650 yuan / ton, the price trend is easy to fall, but it is difficult to rise, and the price gap between the south and the north of alumina has gradually narrowed, and even maintained an upside-down state recently, mainly because the supply and demand pattern of China's alumina market has gradually appeared regional changes since last year. On the supply side, although alumina plants in Shanxi and Henan have reduced production frequently, However, once the price covers the cash cost of the manufacturer, the alumina plant with the condition of re-production will be given full enthusiasm to increase production, resulting in a relatively rapid rise of the supply end and greater pressure on the pattern of supply and demand. On the demand side, the continuous increase of electrolytic aluminum in the southwest region stimulates the expansion of the local alumina supply gap and provides strong support for southwest prices. [SMM analysis] Alumina prices are still trying to rise slightly in the short term.

"Click to view the historical price trend of alumina in SMM.

On the supply side, stimulated by the persistently high smelting profits, the new and resumption production capacity of electrolytic aluminum plants in Yunnan, Sichuan, Inner Mongolia and Liaoning has been gradually released recently, and the supply may continue to grow. SMM data show that by the end of July, the national operating capacity of electrolytic aluminum is 37.05 million tons / year, and the built capacity is 41.23 million tons / year. With the release of new production capacity, the annual operating capacity will rise to about 36.97 million tons, and the annual supply pressure will be highlighted in the fourth quarter.

On the consumer side, SMM conducted research on the downstream market of aluminum processing, including aluminum profiles, aluminum strip, aluminum foil, aluminum cable and aluminum alloy, and statistics showed that the weighted comprehensive PMI of the aluminum processing industry in August was 49.4, approaching the line of ups and downs, up 4.9 percent from July and down 0.5 percent from last year. From the comprehensive analysis, it is expected that aluminum strip, aluminum profile and aluminum alloy are still in the expansion range in September, and the comprehensive PMI will rise further in September. "the comprehensive PMI of the aluminum processing industry is expected to rise further in September near the rise and fall line in August.

However, considering the impact of the epidemic this year, there is a post-position in the overall change trend of consumption, and there may be a delay period of nearly 20 days in the off-season from July to August. Downstream demand does not pick up rapidly after entering the beginning of September, and it is expected that the state of the peak season will only be gradually reflected in the middle and last ten days of September.

In terms of inventory, SMM data show that the weekly inventory of domestic electrolytic aluminum society fell slightly by 7000 tons to 755000 tons on August 27th, and the inventory dropped again and the stock was still lower than nearly 200000 tons in the same period last year, and the accumulation range in the previous period was relatively small. If the peak season of gold, silver and silver is approaching, it may be possible to go to the warehouse again.

SMM believes that from the perspective of domestic fundamentals, short-term consumption has not yet got rid of the off-season effect, the recent trend is phased callback, taking into account the current accumulation of inventory is not as expected, the stock is still below 800000 tons, with the recovery of consumption in September-October, a second withdrawal may be possible, the lower position of 14200 yuan / ton still has a certain supporting force, and it is still possible to rise in the medium term. Pay attention to the actual feedback of consumption, the change of inventory growth and the operation of funds in September. On the macro level, we should pay attention to the progress of the epidemic, the economic stimulus measures introduced by various countries and the possible changes in global trading sentiment caused by the trade relations between the major powers of China, the United States and Europe.

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