CITIC Futures: a long aluminum Ling Han opened alone

Highlights of the report

In the first half of the year, the strong recovery of the global economy combined with a loose monetary environment, Shanghai Aluminum, which was disrupted by supply and driven by strong consumption, went out of the unilateral market. In the second half of the year, the Fed’s expectation of opening the taper made the monetary environment no longer friendly to commodities. However, the contraction of the supply side, the increase and decrease of the consumption sector, and the existence of overseas replenishment demand, optimize the balance of supply and demand, and support the Shanghai aluminum price in terms of income or The relative returns of the non-ferrous sectors have performed well.

Summary:

Main conclusions: In the second half of the year, aluminum prices are operating at a high level and the core operating range is 18,000-21,000 yuan/ton. The macro drive is gradually weakening, but the need to drive to maintain good, the main strategy is still to configure aluminum into a long position.

Macroscopically, the employment and inflation indicators that the Fed focuses on are distorted despite the interference of base numbers and bailout subsidies, causing the Fed to lag in action. However, the Fed’s prediction that the U.S. unemployment rate will fall to 4.5% by the end of 2021 has raised the market’s expectations of exiting quantitative easing at the Jackson Hole meeting in August or the interest rate meeting in September, and at the same time, the timing of interest rate hikes. The point is expected to be relatively early, which is unfavorable for the bulk.

In terms of supply, domestic supply was subject to “dual control” and power constraints and unexpectedly reduced production, resulting in a reduction in annual output from 40 million tons to 39.53 million tons, breaking the previous state of relative balance and creating a gap. The shortfall will be replenished by dumping reserves and imports. The dumped reserves are calculated at 350,000 tons and imported 100,000 tons. In the second half of the year, the output was 21.3 million tons, and 450,000 tons were dumped and imported, constituting a total supply of 20.58 million tons. The annual output was 39.53 million tons, the import was 750,000 tons, the reserve was 350,000 tons, and the total supply was 40.63 million tons.

In terms of consumption, the export of real estate, photovoltaics, automobiles, primary products and finished products in the main consumer sectors can still provide consumption growth. However, the use of aluminum for urban rail transit and high-voltage power transmission and transformation has declined, and the annual aluminum use growth has been revised up to 2.1 million tons. The speed is about 5.5%. In the second half of the year, the total consumption was 20.59 million tons, the consumption increase was about 380,000 tons, the consumption growth rate was 1.9%, and the inventory carried over was about 85 tons.

In terms of balance, the annual output is 39.53 million tons, the import is 750,000 tons, the reserve is 350,000 tons, the total supply is 40.63 million tons, the consumption is about 40.4 million tons, the remaining 230,000 tons, and the carryover inventory is expected to be 850,000 tons. If 450,000 tons of reserves and 450,000 tons are not imported in the second half of the year, there will be a gap of 200,000 tons, and the carry-over will go directly to 400,000 tons at the end of the year, an unimaginable low. Even with the replenishment of reserves, the balance sheet of supply and demand is still in good condition.

In terms of price rhythm, the dumping of reserves to test the market at the end of June and the subsequent off-season consumption in July and August will put pressure on aluminum, but low inventories, especially low warehouse receipts, inhibit aluminum price adjustments. Later consumption promotes the destocking, which will re-drive the price recovery, but the upper space will be subject to the dynamic adjustment of the dumping of reserves and the macro environment.

Operational recommendations: The main strategy is to do more on dips. In the off-season for consumption in July and August, you can actively seize the opportunity of placing multiple orders. The price is below 18,500 yuan, and 18,000 yuan has been repeatedly tested by dumping reserves to strengthen the support. The structure depends on the spot response after the dumping of the storage land; the internal and external ratio is not driven, and the band operation is not driven. In terms of hedging configuration, the fourth quarter can focus on the pairing combination of long aluminum and empty copper.

Risk factors: rapid liquidity tightening; consumption is far below expectations; adjustment of total reserve dumping

1. A review of the aluminum market in the first half of the year: economic recovery & monetary easing & supply interference, pushing aluminum prices to rise steadily

In the first half of the year, aluminum prices continued to rise unilaterally. The reason was that the global economic recovery and the loose monetary environment that escorted the economy continued, and the domestic “dual control” and local power shortages caused the interference rate of electrolytic aluminum supply to rise. , The state of supply and demand is good, attracting capital to intervene to push aluminum prices upward.

In general, the loose monetary environment overseas, supplemented by a proactive fiscal policy, stimulates economic recovery and the market’s enthusiasm for buying bulk assets. At the beginning of February, Biden promoted the 1.9 trillion financial relief plan, which far exceeded market expectations, setting off the enthusiasm of the nonferrous metal industry around the Spring Festival. 3. In April, the manufacturing PMIs of JP Morgan Chase and Europe and the United States showed strong expansion. At the same time, when inflation expectations were rising sharply, Fed officials repeatedly told the market that it was not time to talk about QE reduction. Economic recovery and continued easing are undoubtedly an environment that is good for bulk commodities. Non-ferrous metals have accelerated their rise, and varieties may hit stage highs or refresh historical highs. The frenzied price increase has aroused the attention of domestic high-level officials. In mid-to-late May, the State Council offered to “guarantee supply and stabilize prices” twice a week, and even introduced dumping of reserves to cool the market, and the bulk increase was suppressed. At the same time, the Fed’s dual goals—inflation and employment data are beyond expectations. Although the Fed’s vague meeting in June still maintained low interest rates and the scale of bond purchases, the market’s expectations for future reductions in bond purchases and even interest rate hikes have increased significantly. , The U.S. dollar index counterattacked strongly, which also suppressed commodities including non-ferrous metals.

As far as the aluminum market is concerned, the fundamentals, the high degree of capital participation, and the smooth rise of the market. At the end of 2020, the market is generally optimistic about the supply and demand of the aluminum market in 2021. The seasonal accumulation before the holiday squeezed the aluminum price to the range of 14600-14800. In early February, when Inner Mongolia announced the industrial electricity price adjustment plan, the aluminum price suddenly started. The regional cost advantage has made the listed electrolytic aluminum standard favored, and the interactive pattern of joint rise in stocks and futures has appeared. On March 23, it was reported that it was planned to dump aluminum ingots, and the Shanghai aluminum plate was hit to the limit. However, because the details of the dumping were not released and the destocking was maintained, the aluminum price broke the limit and the center of gravity moved to the 17000-17500 platform. Subsequently, the price of aluminum accelerated to rise following the general trend, reaching a high of 20445 and then falling back. Under the background of the state’s regulation of bulk prices, the fact that power rationing in Yunnan Province shut down electrolytic aluminum production capacity was not fully traded, and the price was hovering between 18000-19000.

2. Viewpoints and core logic of the aluminum market in the second half of the year

In the second half of 2021, aluminum prices will run at a high level, and the macro drive will gradually weaken. However, the need to drive is maintained well, and the allocation of aluminum to long positions is still the main strategy.

The main logic is:

Macroscopically, the employment and inflation indicators that the Fed focuses on are distorted despite the interference of base numbers and bailout subsidies, causing the Fed to lag in action. However, the Fed’s prediction that the U.S. unemployment rate will fall to 4.5% by the end of 2021 has raised the market’s expectations of exiting quantitative easing at the Jackson Hole meeting in August or the interest rate meeting in September, and at the same time, the timing of interest rate hikes. The point is expected to be relatively early, which is unfavorable for the bulk.

In terms of supply, due to “dual control” and local power shortages, Inner Mongolia and Yunnan have reduced production to varying degrees. In particular, Yunnan’s production capacity of more than 800,000 tons was shut down in May. Although all can return in July, it takes time to resume production and reach production. At the same time, the squeezing of resources has delayed the planned production of new capacity, resulting in a reduction in electrolytic aluminum production. To 39.53 million tons.

In terms of dumping reserves, as a bargaining chip to adjust the supply, tracking the open market purchasing and selling reserves information since 2008, the State Reserve currently holds approximately 830,000 tons of primary aluminum. In line with the judgment of keeping the hand card to deter the market, the average reserve is 50,000 tons. It is estimated that the reserve this year will be 350,000 tons. There is still room for imports.

In terms of consumption, overseas economic restoration is still in progress. The rebound in economic aggregates and potential replenishment needs provide protection for primary aluminum consumption, or more reflected in the rebound in finished products and aluminum exports; domestically, the post-real estate cycle is still continuing, and photovoltaics The demand for industrial materials such as, automobiles, etc. keeps growing, while rail transit and power transmission and transformation are facing a reduction. It is estimated that the consumption increase in the second half of the year will be around 20.59 million tons, a growth rate of about 1.9%; the consumption growth rate for the whole year of 2021 will be raised to 5.5%, and the carry-over inventory will be about 850,000 tons.

Rhythmically, the storage test market was dumped at the end of June, and the subsequent off-season consumption in July and August will be superimposed, which will put pressure on aluminum, but low inventories and low warehouse receipts restrain the aluminum price adjustment space. More orders can seize the layout opportunity. . In the later period, consumption promotes the destocking, which will re-drive the price recovery, but overall space, but the upper space will be subject to the dynamic adjustment of the dumping of reserves and the macro environment.

3. The raw material side maintains a loose pattern, and there is little room for price fluctuations

1. Ample supply of bauxite and stable CIF import prices

According to SMM data, my country’s bauxite output from January to May was 41.77 million tons, a year-on-year increase of 14%; the import volume of bauxite from January to May was 45.022 million tons, a year-on-year decrease of 6%; The outlook supply was 86.798 million tons, a year-on-year increase of 2.68%. In terms of matching degree with domestic alumina, the increase in ore supply is slightly lower than that of alumina, but the ore market has not felt tense. In the context of the sharp rise in overseas fees, the ore CIF still fluctuates at around US$45/ton. Reflects the pattern that bauxite is easily available and loose.

2. Low operating rate is the cause, and there are gaps on the alumina surface, which is actually ample

According to IAI data, the global metallurgical alumina production from January to April was 43.136 million tons, an increase of 4.95% year-on-year; SMM data showed that the domestic metallurgical alumina production from January to May was 29.791 million tons, an increase of 7% year-on-year. From the perspective of balance, the global metallurgical grade alumina maintains a surplus, but there is still a gap in the domestic (including imports). However, the gap only pushed the alumina price past 2,500 yuan/ton. The crux of the problem is that the low operating rate of alumina production capacity has suppressed the upward price drive. According to Aladdin’s data, the total domestic alumina production capacity in April was 88.12 million tons. In April, the alumina production capacity was 75.55 million tons, and the operating rate rebounded to 86%.

In the second half of the year, we still held a range of fluctuations in the price of alumina, and it is difficult to make a judgment. The logic has not changed much from before. First of all, alumina with low-cost advantages will still be put into production in the second half of the year, and the total is expected to be 3 million tons. In addition, more than 4 million tons of production capacity will be completed by the end of the year and will be able to cover the oxidation required for electrolytic aluminum in the second half of the year or even next year. For the increase of aluminum. Secondly, the dynamic adjustment of existing production capacity, especially the capacity that was previously shut down due to environmental protection factors, is capable of returning to the market after rectification. These all constitute constraints on the price of alumina. Later, in the overseas surplus market, once the import window opens, imported goods will also supplement and impact the domestic market. For the alumina price range, we still look at 2200-2600 yuan/ton.

4. Domestic production is reduced, and reserves and imports are dumped to supplement supply

In the first half of the year, the first half of the production schedule and last year’s new production volume were relatively smooth. However, policy and power guarantee issues caused the interference rate to rise sharply at the end of February and mid-to-late May, and affected the production increase in the second half of the year. In the second half of the year, the progress of domestic project production mainly depends on the improvement of power constraints.

1. There will be an increase in overseas in the second half of the year, and the annual supply growth is expected to be 1%

According to IAI data, the global electrolytic aluminum production from January to May totaled 27.942 million tons, a year-on-year increase of 4.74%. Among them, the supply of overseas electrolytic aluminum was 11.731 million tons, an increase of 67,000 tons year-on-year, an increase of 0.57%. The epidemic disrupted the rhythm of overseas in the first half of the year, and production was not ideal. According to statistics from Aize Information, about 480,000 tons of new capacity to be invested in the second half of 2021, concentrated in May-October, is expected to increase by about 1% in overseas electrolytic aluminum for the whole year.

2. After the impact of the production cut, the growth rate dropped slightly in the second half of the year, and the annual output was reduced to 39.53 million tons

Aladdin data shows that the domestic electrolytic aluminum production from January to April was 13.0464 million tons, an increase of 8.86% year-on-year. We estimate that the domestic electrolytic aluminum production from January to June will be 19.405 million tons, an increase of 6.6% year-on-year. The increase is mainly due to the cumulative production capacity of about 1.3 million tons of electrolytic aluminum from October 2020 to 2021.2. A total of 715,000 tons of newly added production capacity was put into operation. However, in March, Inner Mongolia carried out production suppression to ensure the completion of the “dual control” task, and continued to increase production in May, resulting in the suspension of about 400,000 tons of production capacity in the region. Yunnan reduced production by about 880,000 tons due to power shortages in mid-to-late May.

Part of the increase in production capacity in the second half of the year comes from the resumption of production in July and after the shutdown of the production capacity in Yunnan after the power supply is restored. The conditions for the return of production capacity in the Inner Mongolia region are harsh and will not be considered for the time being; the other part comes from the release of new production capacity Since most of the new projects to be invested are located in Yunnan Province, the resumption of production takes up manpower, material resources, and electricity, and the overall production schedule needs to be postponed.

Based on the above-mentioned assumptions, the production capacity of domestic electrolytic aluminum is expected to be 40.99 million tons by the end of 2021, which is little changed from the previous estimate. In the second half of the year, the output of electrolytic aluminum is expected to be 20.125 million tons, a year-on-year increase of 4.8%. The annual output in 2021 will be around 39.53 million tons, a year-on-year increase of 6.1%. Before the production cut in Inner Mongolia and Yunnan, the annual output is expected to be 40 million tons, a drop of nearly 500,000 tons. Judging from the average daily output curve, the previous unilateral upward trend has been changed, and it has fallen back and rested and then increased again.

3. Throwing storage and importing become a supplement to supply, and has the characteristics of a seesaw

On June 22, the National Material Reserve Regulation Center announced the release of the national reserve aluminum announcement in 2021, with a total sales volume of 50,000 tons. The rumors of dumping reserves that began on March 23 ended in dust. If 50,000 tons per month are sold to the end of 2021, the total dumped reserves will be 350,000 tons, which is lower than the market’s previous expectations of 500,000 to 600,000 tons, or even 800 to 900,000 tons.

There are two points to note here: 1) Since the National Reserve established the non-ferrous reserve system in 2008, the statistics of the purchase and storage of aluminum and the dumping of reserves have shown that the balance of aluminum inventory is about 830,000 tons. After 350,000 tons are thrown, it will deter the market. Still. (2) The number of dumped reserves is not constant. If the price quickly rises above 20,000, in order to stabilize the price increase, corresponding adjustments will be made. We expect the total annual dumping of reserves to be between 300,000 to 500,000 tons.

In addition, stimulating the inflow of overseas aluminum ingots by opening the import profit window played an important supplementary role. From January to May, domestic aluminum ingots imported 582,000 tons, a year-on-year increase of 1427%. In the second half of the year, imports and dumping of reserves will jointly become a supply and replenishment force, but if the amount of dumped reserves is large, the ratio of imports will decrease, and vice versa.

4. Imports of scrap aluminum rebounded, and the price gap between alloys and aluminum ingots weakened

From January to April in 2021, my country’s total imports of aluminum and alloys totaled 641,500 tons, a year-on-year increase of 19.5%. Imports increased significantly in March and April, but imports of aluminum scrap dropped sharply in May, which may be related to policy tightening. Due to the increase in the number of imported goods, the price difference between alloy ingots and primary aluminum showed a gradual convergence in the first half of the year, and the replacement of refined aluminum was shot.

5. Overseas demand is strong, domestic is not inferior, consumption growth rate is adjusted upward

In the first half of the year, the apparent consumption of domestic electrolytic aluminum was 19.81 million tons, a year-on-year increase of 9.6%. The apparent consumption growth rate in the first quarter was 17.5%, and it was reversed to 3.3% in the second quarter. In the first half of the year, the actual consumption performance of domestic aluminum ingots was better than our estimate at the end of 2020. The difference was mainly due to strong overseas demand. At the same time, the performance of domestic construction and industrial materials was also very good, which led to the opening of the import window in the first half of the year and the quantity of imported primary aluminum. About 650,000 tons (equivalent to consumption growth of 3.6%).

For consumption estimates in the second half of the year, we still follow the main section to analyze the demand for aluminum in the fields of real estate construction and subsequent automotive appliances, new energy photovoltaics, power transmission and transformation, and exports.

1. Consumption driven by overseas money is slowing down, but demand for replenishment of real estate and manufacturing recovery is still worth noting

From a monetary point of view, as the proportion of vaccinations picks up, the US rescue subsidies will no longer be renewed, and the recovery of the US job market supply is expected to accelerate, supporting the opening of the Fed’s Tapering. We expect the Fed will gradually reduce its QE expectations to the market in August-September; Q4 will announce the relevant details of the plan, and implement the reduction at the end of the year or early next year. In other words, the liquidity margin is tightening, but the turning point has not yet arrived.

From the perspective of physical consumption, the overseas epidemic relief plan was issued in currency, which stimulated the consumer demand of residents, while the recovery of overseas industrial manufacturing was relatively lagging, and the resulting physical gap reflected the strong rebound in import demand. In the second half of the year, take the United States as an example. Although the rescue subsidy will no longer be continued, there is a strong demand for replenishment of goods, cars, and existing homes that have been fully destocked, which will drive the consumption of non-ferrous metals, including aluminum, to maintain good The state of growth.

2. The completion cycle is still there, but there is a risk of slowing down, and home appliances are facing a high base challenge

From January to May, the sales area of domestic commercial housing increased by 36.3% year-on-year. From the perspective of single-month sales, real estate sales maintained a good growth state, but the asset-liability ratio after excluding advance receipts from the “three red lines” did not exceed seven percent Ten; the net capacity debt ratio should not exceed; the cash short-term debt ratio should not be less than one), real estate developers are more inclined to use the capital focus as the back-end of the project in order to deliver to boost the debt-to-asset ratio. Therefore, the area of land sold in Baicheng this year is slightly smaller than that of previous years, and the new housing starts are significantly lower than the same period in previous years. However, the level of housing completions has performed better than the same period in previous years. This confirms this view and will continue in the second half of the year.

Based on the 12 months from the new start of housing construction to the main closure of the building, the negative growth in the area of new housing starts in a single month since August last year is expected to be reflected in the gradual weakening of the completion growth in the second half of the third and fourth quarters of this year. However, the direction of real estate developers’ focus on completion remains unchanged, and there is also a demand for replenishment of building profile inventory, which together ensure that the demand for aluminum in this sector increases by more than 600,000 tons.

In terms of home appliances, overseas demand for home appliances such as air conditioners, refrigerators, washing machines, microwave ovens, etc. blowout last year, creating a high base of home appliances in 2020, and this year’s growth will encounter very severe challenges.

Source: Wind CITIC Futures Research Department

3. The progress of photovoltaic installations has no major obstacles, and the prospects for rail transit are not optimistic

“Carbon peaking” is an important task in the next ten years, and increasing the installed capacity of non-petrochemical power sources is one of the important ways to achieve this task. As a typical representative of new energy, photovoltaics have been given full attention. From January to March this year, my country’s photovoltaic installations amounted to 5,330 megawatts, an increase of 1,380 megawatts over the same period last year, and an increase of 130 megawatts compared to 2019. This is the result recorded against the backdrop of a sharp increase in photovoltaic module materials. Since June, the prices of photovoltaic glass (2880, 50.00, 1.77%) and silicon wafers have declined, which is conducive to the advancement of the project to a certain extent. The photovoltaic sector is still supported by a strong increase in aluminum, maintaining the judgment of an annual increase of 500,000 to 600,000 tons.

The prospect of urban rail transit is not optimistic. From the perspective of railway investment, the completed railway investment from January to April this year was 159.71 billion yuan, which was lower than the 162.32 billion yuan in the same period in 2019. In addition, in conjunction with project approval and planning, it is expected that the growth rate of urban rail transit operating kilometers from 2021 to 2025 will face a downward adjustment, and the corresponding growth rate of operational vehicle demand will also be correspondingly adjusted downward. It is estimated that the number of operating vehicles will rise to 55,000 in 2020, and the supply in 2020 will be 14,000. The growth rate will decline in 2021. The annual supply is expected to be 10,500, which is 3,500 less than in 2020, and the demand for aluminum will decrease by about 280,000 tons.

4. Aluminum reduction for high-voltage power transmission and transformation sector has converged

The main aluminum use scenario for the power grid sector is steel-cored aluminum stranded wires for high-voltage power transmission and transformation. High-voltage power transmission and transformation projects are subject to national planning and approval, and power grid aluminum consumption depends on policies. From January to May this year, the total investment in the power grid was 122.5 billion yuan, an increase of 8.02% year-on-year. On the basis of last year’s digging, compared with the same period in 2019, the two-year growth rate was 5.88% year-on-year. Judging from the bidding data of the State Grid, the delivery volume of aluminum-related products of the power grid in 2020 will fall precipitously, and the delivery volume will decrease by 650,000 tons compared with 2019. Due to the increase in project bidding batches, the current delivery volume in 2021 is expected to continue to drop by 190,000 tons compared with the full-year delivery volume in 2020, which is convergent from the 500,000 tons reduction expected at the end of last year.

5. Automobile and aluminum exports continue to maintain an incremental role

According to data from the China Automobile Association, in the first five months of this year, the production and sales of automobiles were 10.626 million and 10.875 million respectively, and the production and sales increased by 36.4.1% and 36.6% respectively year-on-year. In addition, according to the China Association of Automobile Manufacturers, China’s automobile sales will increase by 4% in 2021, and the demand for aluminum in the automotive sector is expected to increase by 200,000 tons.

Aluminum exports are one of the important components of my country’s aluminum consumption. Overseas industrial manufacturing has not yet completed recovery, and this year’s internal and external price ratio is still high, and the rebound in aluminum exports is slightly less than expected. From January to May this year, my country’s unforged aluminum and aluminum exports totaled 2.162 million tons, an increase of 150,000 tons compared with 2.012 million tons in the same period last year. The European and American economies gradually resumed production, and overseas demand continued to pick up in the second half of the year. The annual export volume is expected to rebound to 5.4 million tons, an increase of 550,000 tons from the previous year.

6. Consumption summary: Consumption increased by 1.9% in the second half of the year, and the annual growth rate was increased to 5.5%

In the first half of the year, the apparent domestic consumption of electrolytic aluminum was 19.81 million tons, a year-on-year increase of 9.6%, which was better than our estimate at the end of 2020. The difference was mainly due to strong overseas demand. At the same time, domestic construction and industrial materials also performed very well, leading to higher The import window opened in half a year, and the amount of imported primary aluminum was about 650,000 tons (equivalent to a consumption growth of 3.6%, which is the main source of the difference).

From a full-year perspective, the export of real estate (+60), photovoltaics (+50), automobiles (+15), primary products (+55) and finished products (+75) in the main consumer sectors can still provide consumption growth, but urban rail transit Transportation (-28), high-voltage power transmission and transformation of aluminum (-19) fell, and the total aluminum use increased to 2.1 million tons, a growth rate of about 5.5%. In the second half of the year, the total consumption was 20.59 million tons, the consumption increase was about 380,000 tons, the consumption growth rate was 1.9%, and the inventory carried over was about 85 tons.

6. Outlook: balance of supply and demand, structure and price

1. Disposal of reserves and imports to replenish supply, maintaining a good balance

The unexpected reduction in domestic supply due to “dual control” and power constraints resulted in the reduction of annual output from 40 million tons to 39.53 million tons, breaking the previous state of relative balance and creating a gap. This part of the gap will be supplemented by dumping reserves and imports. It is estimated that the annual import volume will be 750,000 tons, of which 650,000 tons will be realized in the first half of the year and 100,000 tons in the second half of the year. In terms of changes in domestic table demand), the amount of dumped reserves is calculated at 350,000 tons, that is, the second half of the year is about 450,000 tons of imported and dumped reserves. In the second half of the year, the output was 21.3 million tons, dumped reserves and imported 450,000 tons, which constituted a total supply of 20.58 million tons. The consumption growth rate was 1.9% to 20.59 million tons. Supply and sales were basically balanced. The inventory carried forward at the end of the year was basically the same as the carry forward in the first half of the year.

The annual output was 39.53 million tons, the import was 750,000 tons, the reserve was 350,000 tons, the total supply was 40.63 million tons, the consumption was about 40.4 million tons, the remaining 230,000 tons, and the carryover inventory is expected to be 850,000 tons. If 450,000 tons of reserves and 450,000 tons are not imported in the second half of the year, there will be a gap of 200,000 tons, and the carry-over will go directly to 400,000 tons at the end of the year, an unimaginable low. Even with the replenishment of reserves, the balance sheet of supply and demand is still in good condition.

2. Normalization of low inventory, high prices and dumping of reserves may still suppress the structure

The overall inventory level this year is low, but the spot premium and the Shanghai aluminum structure have been significantly suppressed. After the news of dumping reserves on March 23, the premium was suppressed and the structure was directly flattened. On the other hand, high aluminum prices and relatively cautious downstream purchases are also not conducive to pushing up premiums. Throwing the dust to the ground and paying attention to the opportunities for long spreads in the second half of the year when the inventory goes to a low level.

3. Aluminum prices are mainly high and relatively strong, and the core range of the main contract is 18,000-21,000 yuan/ton

In the second half of the year, the Fed’s taper pressure hung over the market, which was slightly negative for commodities. However, Shanghai Aluminum’s fundamentals and inventories are expected to continue at a low level to support the strong operation of aluminum prices at high levels. The trading dimension is still dominated by long-term thinking. Shanghai Aluminum’s main core price range is 18,000-21,000 yuan/ton. The average value is expected to be 18,800 yuan/ton. LME’s three-month aluminum operating range is US$2300-2800/ton, with an average price of US$2,550/ton.

Rhythmically, the storage test market was dumped at the end of June, and the subsequent off-season consumption in July and August will be superimposed, which will put pressure on aluminum, but low inventory, especially the low warehouse receipt status, inhibits aluminum price adjustment space, more orders can be grasped Layout opportunities. Later consumption promotes the destocking, which will re-drive the price recovery, but the upper space will be subject to the dynamic adjustment of the dumping of reserves and the macro environment.

In terms of internal and external ratios, overseas and domestic consumption will be on par, and the trend of the ratio may be more entangled. Phased band operations are appropriate.

Operationally, the main strategy is to do more on dips. In the off-season for consumption in July and August, you can actively seize the opportunity of placing multiple orders. The price is below 18,500 yuan, and 18,000 yuan has been repeatedly tested by dumping reserves to strengthen the support. The structure depends on the spot response after the dumping of the storage land; the internal and external ratio is not driven, and the band operation is not driven. In terms of hedging configuration, the fourth quarter can focus on the pairing combination of long aluminum and empty copper.

Risk factors: rapid liquidity tightening; consumption is far below expectations; adjustment of total reserve dumping

CITIC Futures Zheng Qiongxiang Qin Jingshen Lighting

Leave a Comment