Shanghai aluminum up to break the game still need to wait


Shanghai aluminum has continued to oscillate the trend for 3 months, and is still stable in the range of 17500-19000 yuan / ton, always fluctuating around the cost line. Although the overseas Russian aluminum rumors continue, but so far no confirmed prohibited delivery news has appeared, so it has not have a greater impact on the domestic Shanghai aluminum prices. As of October 26, Shanghai aluminum closed 18,570 yuan / ton, the oscillation range is still difficult to break through.

In my opinion, although there is news that the Federal Reserve will slow down the rate hike to 50BP in December, but the short-term macro positive is not enough to support the aluminum price upward break, the fundamentals are still the top priority of market trading. The current fundamentals have not changed greatly, the market has formed a new round of power rationing and production reduction expectations, and the demand is still mainly seasonal recovery, before the largest consumer terminal real estate to provide consumption highlights, the overall aluminum price is expected to be backed by the cost range oscillation.

Supply-side production capacity was slightly repaired.The supply of aluminium profiles ,aluminium profiles for windows and doors , aluminum fabrication and so on is rising.

In the general environment of water and electricity shortage in Yunnan, in order to ensure the power supply in the coming winter and next spring, electrolytic aluminum, a high-energy consumption industry, first entered the list of production restriction. At present, about 1.04 million tons of production capacity has been discontinued, and from Q4 to Q1 next year, the reduced production capacity may be further expanded to 1.56 million tons, and then gradually resume production according to the recovery of rainfall. Overall, Yunnan production accounted for only 2.6% of the national production capacity, with a small impact. In addition, production cuts in Guangxi and Sichuan are gradually resuming production, while Xinjiang, Guizhou and Inner Mongolia are still in production. Shanxi also started 65,000 tons of new capacity this month, partially offset the loss in Yunnan, and the supply side capacity is being slowly repaired.

In terms of output, the production of electrolytic aluminum in September was 3.3395 million tons, up 7.34% year on year, and down 4.26% month on month. Among them, Yunnan and Sichuan provinces contributed to the main reduction. At present, with the gradual recovery of production capacity in Sichuan and the continuous promotion of new production capacity around Sichuan, the production capacity is expected to rise slightly in October, and pay attention to the subsequent production cuts.

The demand side is dominated by a seasonal recovery

With the high decline of export profits, the export volume of aluminum in September was 496,000 tons, down 8.22% from the previous month, and up 0.8% year on year. The export volume gradually returned to the normal range, and the market attention gradually turned to the domestic consumer market. Gold nine silver ten peak season, downstream consumption gradually improved, but the local epidemic has affected the demand.

From the perspective of domestic end demand, the auto sector contributes to the main consumption, the real estate performance is still weak, it is expected that the subsequent aluminum price upward breakthrough also needs to look forward to the real estate policy force. According to the data of the National Bureau of Statistics, the area of housing in China was 947.67 million square meters, up 11.41 month-on-month, down 38% year-on-year; the completed area was 408.79 million square meters, up 10.9% month. m. and down 19.9% year-on-year. According to the China Association of Automobile Manufacturers, China's automobile production in September was 2.409 million units, up 0.58% month-on-month and 35.8% year-on-year, which is still expected to have room for improvement. As of October 24, the domestic electrolytic aluminum social inventory of electrolytic aluminum was 626,000 tons, down 10,000 tons week on week, and the out of storage improved significantly. But recently the northwest transport capacity block, the arrival of less, alert to the end of the aluminum ingot concentrated goods caused by the accumulation of the phenomenon.

Signs of a global recession could slow the pace of Fed rate hikes, but we need to be cautious before landing in December. From a fundamental point of view, in the short term, regional power shortage and production reduction concerns still exist, the demand side is still mainly seasonal recovery, aluminum prices break up and still need to wait for a significant improvement in the real estate data. Before this, we judge that the probability of aluminum prices maintaining the oscillation trend is large.

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