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Aluminum: the short term price pressure of the Spring Festival aluminum ingot

West Aluminum - West Aluminum Aluminum Industry Telecom: the price of aluminum has been decreasing repeatedly. In addition to the technical rebound of the US dollar, the price of metal products will be pressurized, and the emotional transmission of the global stock market headed by the US stock will be superimposed on the commodity market. But there is still a problem that is that, with the arrival of Chinese Spring Festival, the inventory of aluminum ingot in China is going to enter the tired warehouse stage.
According to the current market feedback, the processing enterprises in the lower reaches of East China have basically completed the preparation of the Spring Festival, and the processing of aluminum rods in Southern China has stopped. Paul railway coal transportation occupies part of the aluminum ingot transmission capacity, enterprises were forced to stop delivery, thus explicit inventory increase is not obvious, but in transit inventory, years ago after the release of this part of the railway spring transportation inventory will be sent to the distribution center, so during the Spring Festival can focus on Growth stocks of aluminum ingots. From the holiday time, the downstream processing enterprises in East China production during the Spring Festival holiday for 10 days or so, Guangdong enterprises to stop production for 30 days, and after the resumption of production workers to work on time because, downstream processing enterprises in short time to reach full production, large-scale production to real in the Lantern Festival, which is the beginning of March. In this way, the upstream production aluminum smelting enterprises, maintain normal supply, while the downstream demand cliff type reduction, a quarter of aluminum stock will increase significantly.
From the aspect of production capacity, about 1000000 tons of production capacity will be released in the first quarter of China, and the production capacity is not much. Most of the new capacity is concentrated in the Guangxi region, which is not low in electricity costs, but with the current trend of aluminum prices, the capacity is likely to be delayed. Taking into account the capacity of new production and the accumulation of inventory before and after the Spring Festival, considering the estimated first quarter of this year, China's electrolytic aluminum supply is still in excess, and the spot stock of aluminum ingots will reach 2 million 100 thousand tons. Under the high stock expected pressure, the lack of new reform policy support, the first quarter aluminum price no rebound power, aluminum prices will challenge the cost of support areas.

The two quarter is the peak season of the traditional consumption. If we can't see the decline of stock market and the market sentiment can not be released under the general expectation of the market, the aluminum price will also continue to be explored in the near future, and the breakdown cost will be supported. As to whether an aluminum factory will be able to respond to the reduction of production, we feel that it is unlikely that the supply and demand imbalance in the middle and long term aluminum industry will not be long.
On the one hand, because the supply side controlled the demand side maintain the growth rate: before the Ministry issued on matters related to the aluminum electrolysis enterprises capacity replacement, explicitly required to complete the replacement capacity before December 31, 2018, not to be expected replacement, but in recent years no longer approve new index index of electrolytic aluminum, will undoubtedly become scarce resources. From last year's execution and feedback, the industry has basically accepted such a regulation. After several rounds of index replacement, most of the new factories with advanced technology and low cost in recent years already have indicators. Institutional statistics have not yet replaced capacity of about 1 million tons, less than the annual capacity of 1/40, and the cost of transaction is also increasing. The production cycle will be lengthened because of the no obvious advantage of regional cost and the reason for the price of aluminum. When supply side strengthens control and demand side growth and stability, aluminum industry's return to supply and demand balance is still the main trend and regulation target. Aluminum price is close to cost area and there will be room for growth in the future.

On the other hand, the market continued shortage of foreign aluminum electrolytic aluminum production, overseas investment capacity is limited, we estimate a quarter of overseas supply shortage of 100 thousand tons of electrolytic aluminum, aluminum inventories fell to 1 million tons of LME. In the context of external strength and internal weakness, coupled with the depreciation of the US dollar and the passive appreciation of RMB, the Shanghai stock ratio has reached a very low level of 6.5. From the global balance, the demand gap in foreign countries will eventually be suppressed by domestic stock. Even if the United States has double reverse to China's aluminum industry, we also predict that the export of aluminum will grow slowly in the two quarter, and that the Shanghai stock ratio must be repaired upwards.
Therefore, in the short term, the aluminum market is in the seasonal disadvantaged, and the accumulation of aluminum ingot stock is a big probability event, which may impact the market. However, in the medium and long term, the domestic supply and demand repair period is in the country, and there is a power to fill the gap between supply and demand of foreign countries, and the digestion of the stock is predictable. The aluminium market after a quarter of high inventory pressure, with further recovery consumption and export demand superimposed, market pressure will gradually ease.

(the Propaganda Department of the Chongqing West Aluminum aluminum industry XinDa Limited by Share Ltd finishing feeds)

Source: Network
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