May aluminum prices or corrections do not rule out low risk

Core Tip: Shanghai Aluminum rose this month and the trend is stable. In the spot market, the aluminum prices are now rising positively. The holding companies are reluctant to sell and have a very strong sentiment. The stocks in the downstream are increasing, and the trading is better. However, the market outlook is still weak, and aluminum prices are unlikely to improve significantly in the short term.

First, the fundamental analysis Supply and demand analysis (1) China's bauxite imports continued to sharply decrease in March. Customs data showed that in March, China imported 1.8302 million tons of bauxite, a decrease of 59.17% year-on-year, of which 477,400 tons of Indonesian ore were imported in March, a year-on-year decrease. 85.56%. In March, the import of Indian ore was 48,500 tons, a year-on-year decrease of 87.68%. The import of Australian ore was 768,800 tons, a year-on-year decrease of 1.71%.

In March, the total import of bauxite in China continued to decline at an accelerated rate, which was a decrease of nearly 60% year-on-year. This was mainly due to the policy's impact on the sharp drop in the number of ores from Indonesia; and for the time being, in the short term This situation does not seem to have obvious signs of improvement.

(2) In March, China's alumina imports increased significantly year-on-year. According to China Customs data, China’s alumina imports in March were 376,935 tons, an increase of 93.12% year-on-year; however, it was a decrease of 19.1 from 464,800 tons of the previous month. %.

From the data, we can see that China’s alumina imports in March were still falling from a high level; at the same time, due to the poor downstream demand, due to the economic slowdown and continued decline in aluminum prices, we expect domestic alumina The demand should still not be too strong.

In addition, China's alumina production in March was 3.873 million tons, which was a slight upward trend. On the one hand, this is due to the decrease in total import volume. On the one hand, domestic alumina prices have fallen more than import prices. In addition, the reduction in production output has not been positive. Therefore, the actual production of alumina is still increasing. We expect that In the short term, this situation may also continue.

(3) In March, China’s electrolytic aluminum production continued to fall slightly. According to the latest data released by the National Bureau of Statistics, China’s electrolytic aluminum production in March was 1.984 million tons, up 8.24% month-on-month, and up 14.42% from 1.734 million tons in the same period last year. %.

From the data, we can see that China's current electrolytic aluminum production is still maintaining a sustained growth; despite the recent slump in aluminum prices, especially since the beginning of the year, the decline rate has accelerated significantly; but the output growth of electrolytic aluminum in China There was no noticeable slowdown. Even though many large manufacturers have announced plans to cut production on a large scale during the year, we still expect the maximum increase in output of electrolytic aluminum to slow slightly, and this is not yet achievable in the short term.

(4) In April, LME aluminum stocks fell slightly, while aluminum stocks in the previous period continued to rise sharply. After LME aluminum inventories fluctuated in April, they eventually declined slightly. By the close of the 29th, the total inventory had fallen to 5,359,475 tons; At the end of March, 53,810,000 tons fell by about 0.42%. However, we believe that this was due to a wave of rebound in aluminum prices in April. With the subsequent correction, the probability of aluminum stocks rising again is obviously higher. .

Aluminum stocks in the previous period continued to rebound sharply in April; data show that as of the close of the 29th, the total inventory has risen to 246,855 tons; compared with 180,353 tons at the end of March, the chain increased by 36.9%. However, for now, we expect this trend to be difficult to maintain in the long term. With the aluminum prices once again pulled back, aluminum stocks may also be under pressure again at any time.

(5) In April, the volume of aluminum market in all regions of the country did not reach the expected level. In the area of ​​aluminum terminal consumption in China, construction and transportation accounted for half of the total. In March, there were 2.2017 million automobiles, which was an increase of 34.41% month-on-month and an increase of 5.59% year-on-year; sales were 2.6911 million, an increase of 35.84% month-on-month and an increase of 6.58% year-on-year. In the first quarter, automobile production and sales were 5.917 million and 5.9223 million, an increase of 9.16% and 9.18% respectively.

According to the latest data released by the National Bureau of Statistics, from January to March 2014, the investment in real estate development nationwide was 1.5339 trillion yuan, a year-on-year increase of 16.8%, and the growth rate was down 2.5 percentage points from January to February. Among them, the residential investment was 105.3 billion yuan, an increase of 16.8%, and the growth rate dropped by 1.6 percentage points. In the first quarter, the area of ​​new housing starts fell by 25.2% year-on-year, of which new housing starts fell by 27.2%. In the first quarter, the country’s sales of commercial housing fell by 3.8% year-on-year, of which residential sales fell by 5.7%. Sales fell 5.2% year-on-year, of which residential sales fell 7.7%; in the first quarter, real estate development companies land purchase area fell by 2.3% year-on-year. As of the end of March, the total area of ​​commercial housing sold in China exceeded 520 million square meters, a year-on-year increase of 22.9%.

According to the data of terminal demand, the domestic demand for aluminum materials has weakened in April. Table 1 shows that in Zhejiang, the overall operating rate of aluminum processing companies surveyed in April was around 44%-70%; in Henan, the overall operating rate of aluminum processing companies was maintained at around 20%-70%; in Guangdong, aluminum processing The overall aluminum production of the company is about 50%-80%; in Jiangsu, the overall operating rate of aluminum processing companies is about 60%-90%. In Shandong, the overall operating rate of aluminum processing companies is about 40%-60%. From the data point of view, the level of start-up of downstream aluminum processing companies in Guangdong was slightly higher than that in other regions. Judging from the fact that our aluminum R&D team investigated the start-up of aluminum processing companies around the country, compared with the previous month, both the average order volume and start-up of small and medium-sized enterprises increased slightly in April. However, the season of seasonal consumption has been retreating. The overall aluminum market volume has not reached the expected level. From the end of April to May, orders for aluminum materials are expected to decrease. With the past quarter of seasonal consumer spending, transactions in the aluminum market have been muted since the end of April. Aluminum trading is expected to decrease next month, or it will usher in the low season of aluminum consumption in the second quarter. The above research is for reference only.

Second, the spot market analysis Spot price analysis in East China: In April, spot prices of aluminum ingots in eastern China showed a sharp rebound, with fluctuations ranging mainly between 12630 and 13440 yuan/ton. As can be seen from the above chart, East China Aluminum sharply higher this month, aluminum prices have continued to rebound from the beginning of the month, until the end of the month before the callback; and by the end of the month-end closing, aluminum prices have risen back to the vicinity of 13,300 mark It rose by about RMB 700/t from last month. However, we believe that such a short-term uptrend is not based on sound foundations; and the current fundamentals of the aluminum market have not been significantly improved, so this wave of rebound is mainly guided by external disks and short-term speculations driven by funds; it is often easier to come by. Going too fast, the market outlook is likely to show a rapid decline. At the end of the month, the sharp correction of aluminum prices also showed us a little sign. We expect that in May, aluminum prices will have a very high probability of a new low, and even falling below 12,000 will not be impossible; For the time being, we will turn to wait and see instead of rushing to stock up.

South China: In April, the spot prices of aluminum ingots in southern China also rose sharply, and the fluctuation range was mainly between 12880-13740 yuan/ton. From the above figure, it can be seen that the South China Aluminum also showed a significant pick-up trend this month; the aluminum price rebounded from the beginning of the month and showed signs of falling pressure at the end of the month; its trend is basically consistent with East China Aluminum. At present, the price difference between the two places has remained at around 250 yuan/ton. We do not think this deviation is too large for the spread. Therefore, the outlook for aluminum prices in the two cities is still expected to remain largely consistent. As mentioned above, we expect that in May, the probability of aluminum price correction is very high, and there is even the risk of a new low; therefore, it is recommended that downstream businesses can temporarily not wait for stocking, but can wait and see for the time being.

2. In the alumina market in April, alumina prices in various regions in the country continued to decline overall. In Shanxi, the market price continued to decline this month; as of the end of the month, the mainstream transaction range has dropped to between 2340-2400 yuan/ton, and the transaction status has become increasingly light. In Henan, the market price also continued to decline this month. At present, the local mainstream transaction range has dropped to 2450-2480 yuan / ton, but trading conditions are also difficult to see improvement. In Shandong, the market price of this month also declined. As of the end of the month, the mainstream trading range temporarily remained at 2460-2500 yuan/ton, and the trading situation was also more general. As for South China, the market price fall this month is still relatively large, the current minimum turnover has been reduced to about 2180 yuan / ton; at the same time because the downstream demand is extremely sluggish, the market is often in a state of price and no market, so the source of goods in addition to their own use, mostly It is mainly transported to the surrounding areas. In addition to the Shandong region, Chinalco's manufacturers still maintain a constant offer of 2,900 yuan/ton. Domestic electrolytic aluminum prices showed a sharp rebound this month, but alumina prices still performed poorly; this was mainly due to the sluggish downstream demand and continued low import prices; and for now, we expect this trend to It will continue; so it is recommended that production companies still maintain normal shipments, while the use of goods will be delayed as much as possible to keep on-demand purchases. The above is personal opinion, for reference only!

3. The scrap market continued to stabilize after the Shanghai aluminum contract stabilized this month. The overall trend was stable. From the above figure, it can be seen that the price of scrap aluminum has risen positively this month, and the price of aluminum scrap has risen. This has driven the sentiment of the business, and the market close to May Day holiday has improved. Judging from the trend of waste aluminum around the country, the possibility of a sharp increase in short-term aluminum scrap is relatively weak and remains weak. It is expected that the price of aluminum scrap will continue to be dominated by shocks next month.

Foshan area: The price of aluminum scrap in Foshan area increased this month. As of the end of the month, the quoted price of Foshan Alcoa raw market was in the range of 10800-11000 yuan per ton, up 150 yuan per ton from last month, and the price of broken raw aluminium was 11550-11750 yuan per ton. Compared with the previous month, it rose by 300 yuan/ton. The price of aluminum scrap rose this month. Merchants are reluctant to sell their goods with reluctance. Recyclers are bullish, and downstream goods are increasing, and the market is doing better.

Hebei area: This month, the price of scrap aluminum in Hebei area has stabilized. As of the end of the month, the prevailing quotation for Hebei Alkaline Alcoa market was at RMB 10,600-10,800/ton, up RMB 200/ton from the previous month. The demand for downstream manufacturers in the Hebei region increased this month.

Hunan: In the month of Hunan, the price of scrap aluminum has risen positively. As of the end of the month, the mainstream quoted price for the machined aluminum market in Hunan was at RMB 10,600-10,700/ton, up RMB 150/ton from the previous month. In this month, the sales of aluminum scrap in Hunan were good, and the confidence of the merchants was sufficient. The number of goods picked up at the end of the month was higher, and the market transactions were more active.

Chongqing area: The price of scrap aluminum in Chongqing rose this month. As of the end of the month, the mainstream quoted price for Chongqing's machine-made aluminum market was between 10,500 and 10,700 yuan/ton, up 300 yuan/ton from the previous month. Aluminum wire quoted at 11800-11900 yuan / ton, up 300 yuan / ton from last month. The market now has little demand for scrap aluminum. Although the price of scrap aluminum has risen, the market is trading generally.

Prices of aluminum ingots in Foshan rose this month. Up to now, the price of Foshan aluminum ingots without tickets is RMB 12,790-12,890/ton, up by RMB 630/ton from the previous month. As of the end of this month, the price of broken raw aluminum in Foshan rose by 300 yuan/ton from the previous month to 11550-11750 yuan/ton. This month, the price of aluminum ingots in Foshan area has been stable. At present, the trend of aluminum scrap is improving, with positive growth, business sentiment is strong, price is reluctant to sell, and the May Day holiday comes. Downstream companies have increased their stocking and market transactions have been generally better, but the favorable factors in the early stages have been exhausted. If there is no good support in the short term, it is unlikely that the price of aluminum will be greatly improved. As can be seen from the above figure, the spread between spot aluminum ingots and scrap aluminum has increased this month, from 860 yuan/ton at the end of last month to 1190 yuan/ton at present, but it is still at a low level. The advantages of aluminum scrap are still relatively low. weak.

Third, technical analysis London aluminum prices in April showed a trend of decline, the volatility is mainly maintained at 1775-1902 US dollars / ton. As can be seen from the above chart, Lun Aluminum continued its previous rally at the beginning of the month and reached an intraday high of US$1902.5/t on the 11th, but then it was under pressure near 1900 U.S. dollars and turned into a small consolidation trend; After the second upside attack on the 23rd, the callback began. By the end of the month, it had fallen back to around 1800 US dollars. At present, its correction trend has apparently started. We recommend investors to pay close attention to the 1770 US dollar level. Whether you can maintain stability; if not, there will be a very high probability of a new low; so now continue to maintain short-term thinking in the operation, and light tank holders can also increase the amount of empty single.

The Shanghai aluminum main contract rebounded in April, and the volatility was mainly maintained at 13005-13725 yuan/ton. As can be seen from the above chart, Shanghai Aluminum was boosted from the outer disk at the beginning of the month and continued its uptrend. However, investor confidence was still not very strong at that time. Therefore, the rebound in aluminum prices was obviously weak; and it was not until the 23rd, the outer disk Once again, the Dongfeng, Shanghai aluminum turnover also significantly volume, and in two consecutive days the increase of more than one hundred yuan per ton; but with the outer disk again defeated Maicheng, Shanghai aluminum is also the last spring is not in; aluminum prices and the 25th intraday That is, there was a wide range of oscillations and a trend that eventually ended lower, which laid a slogan for its correction; indeed, as we expected, aluminum prices started to pull back all the way, and in the end of the month, they plunged more than one hundred. Point, basically established that its downward trend has been fully expanded. We expect that after Shanghai’s May 1st, Shanghai Aluminum may have a very high probability of gapping and opening lower, and continue to decline in this regard. The new low in the afternoon market should be a matter of no suspense; even below the 12,000 mark is not without may. Therefore, we suggest that investors can now actively short-selling and maintain a firm bearish outlook on the general trend.

IV. Market Outlook and Operational Recommendations The London Aluminum Company led the market in April, and the volatility was mainly maintained at US$1775-1902/t. At the beginning of the month, Lun Aluminum continued its previous rebound and went up to US$1902.5/t on the 11th, but then it pressured pressure near 1900 U.S. dollars and turned into a small consolidation trend. Finally, it was re-inaugurated on the 23rd. After the attack failed, it began the callback; by the end of the month, it had fallen back to around 1800 US dollars.

The Shanghai aluminum main contract rebounded in April, and the volatility was mainly maintained at 13005-13725 yuan/ton. At the beginning of the month, Shanghai Aluminum had boosted from the outer disk and continued its uptrend. However, investor confidence was not very strong at that time. Therefore, the rebound in aluminum prices was significantly weaker; and until the 23rd, the external disk was once again ascribed to the high winds. Shanghai Aluminum also made significant sales volume, and rose more than 100 yuan per ton within two consecutive days.

In the spot market, East China Aluminum sharply increased this month. Aluminum prices have continued to rebound from the beginning of the month and have not recovered until the end of the month. At the close of the month-end, aluminum prices have risen to near the 133,000 mark. The monthly price rose by about 700 yuan/ton. However, South China Aluminum also showed a significant upward trend this month. Its trend is basically the same as that of East China Aluminum; we expect that in May, the probability of aluminum price correction is very high, and there is even a risk of a new low.