[SMM Analysis] short positions substantially increase the position of Shanghai Aluminum far month contract, after the festival aluminum prices will continue to go down?

The price of aluminum fluctuated and sank today. The 1907 contract of Shanghai Aluminum Company closed at the lowest level of 13950 yuan / ton in the week, and the K line closed in the shade line, recording three weeks of continuous shade. From the position, from the following chart, we can see that the positions of 1906 contract and 1907 contract are decreasing, and both of them are long position reduction, while the long month contract of 1908 contract and 1909 contract are both increasing position, and both of them are short position increase, of which 14502 are increased by 1908 contract. The market is closed tonight and the Dragon Boat Festival holiday is closed. Will aluminum prices continue to fall after the festival?

SMM believes that without the impact of emergencies, aluminum prices will be limited in the short term after the holiday. Although short positions have increased sharply in long-month contracts, suggesting that the market is more bearish on subsequent aluminum prices, on the basis of current fundamentals, inventories are still on a continuous downward trend in the near future. Today, according to SMM, the national electrolytic aluminum inventory fell another 64000 tons to 1.148 million tons compared with last Thursday, and the inventory stock was down 829000 tons from the same period last year. Although there is a certain downward pressure on alumina at the cost end in the long run, it will still take a certain period of time because of the actual discharge of new alumina production capacity, and the price of bauxite mines in Shanxi, Henan, and other places has a trend of price increase due to environmental protection, maintenance, technical reform, and other reasons. It is difficult to cut the price of alumina sharply in the short term. Although there is a negative expectation on the consumer side in the future, the heat of receiving orders in the lower reaches of the middle and early June has not declined rapidly, and there is still half a month from the seasonal off-season in July and August.

SMM believes that the macro atmosphere is empty, the return of aluminum prices under pressure after the festival, but the downward space is still limited, it is expected that the March contract price in Shanghai will fluctuate between 13800 and 14100 yuan / ton next week. SMM will continue to pay attention to the aluminum price changes in the short factors, and timely update the relevant content in the minutes of the morning meeting released on a daily basis.

(SMM Xu Man 021 51595898)