17 000-20 000 yuan / ton interval oscillation operation

Affected by the news that the regulatory authorities recently interviewed key enterprises in the black and nonferrous industries, on May 24, the nonferrous plate fell as a whole, and the price of Shanghai aluminum futures fell by more than 3%. The market sentiment was suppressed. Although the recent macro bad news on the commodity market to form a certain pressure, but aluminum fundamentals remain strong. Among them, the social inventory has further declined, the downstream rigid demand has maintained a strong trend, and the supply side favorable factors still exist in the later period. At present, the market inflection point has not appeared, and the favorable factors support the aluminum price, so it is not appropriate to be too pessimistic in the short term.

Macro multi space interweaving

The US Federal Reserve’s monetary policy has not yet turned, which has a certain support for the commodity market. According to the latest minutes of the Federal Reserve meeting, many officials are ready to start to consider adjusting monetary policy, but the employment data depresses the expectation of economic recovery, which is not enough for the Federal Reserve to tighten monetary policy in the short term. Among them, the number of non-agricultural employment in the United States increased by 266000 after the quarterly adjustment in April, far less than the market expectation of increasing by 1 million, and less than the previous value of 916000.

At home, the government has clearly proposed to do a good job in ensuring the supply and price of bulk commodities, and comprehensively curb the unreasonable rise of commodity prices. Affected by this bad news, the industrial product market fell sharply. In the short term, the official initiative triggered the market’s expectation of the later policy regulation to rise, and the commodity market sentiment showed signs of cooling down.

Supply side tightening expectations still exist

Since the first quarter, the aluminum supply side has rebounded significantly. According to the latest data, the output of electrolytic aluminum in April was 3.35 million tons, with a year-on-year growth of 12.4% and a month on month growth of 3.9%, while the output in April 2020 only increased by 1.5% year on year. From January to April, the output of electrolytic aluminum was 13.02 million tons, a year-on-year increase of 9.6%. It can be seen that with the aluminum industry profits remain high, the upstream supply side shows obvious signs of recovery.

On May 13, the national development and Reform Commission held a video conference to remind some provinces and cities that the energy consumption intensity did not decrease but increased in the first quarter, which raised the expectation that the market would further strengthen the dual control of energy consumption.

According to statistics, the total production capacity of electrolytic aluminum in Guangxi, Yunnan, Qinghai, Ningxia and Xinjiang is about 16.91 million tons, accounting for about 40% of the current domestic production capacity. Among them, Yunnan and Guangxi are the main provinces with new electrolytic aluminum production capacity this year. It is expected that the dual control of energy consumption will delay the upstream production schedule, especially affect the later production schedule of new capacity. In addition, last week’s drought in Yunnan will slow down the production of electrolytic aluminum.

According to ALD’s comprehensive assessment, the current operating capacity of Yunnan Province is 3.92 million tons, which is estimated to be between 600000-780000 tons due to the direct shutdown of the tank from the middle of this month to the end of this month. On the whole, although the high profits of the industry have been stimulating the supply side to pick up, the expectation of supply side disturbance still exists in the later stage, but the influence degree is uncertain.

The effect of traditional peak season is obvious

At present, the downstream construction has maintained a good situation. According to statistics, the operating rate of domestic downstream construction profile enterprises was 62.07% in April and is expected to be 60% in May; 36% in April and 62% in May; The operating rate of aluminum plate, strip and foil enterprises was 81.64% in April and 81% in May; The operating rate of aluminum alloy A356 enterprises in April was 54.51%, with a year-on-year increase of 0.61%. Industry feedback is now in the peak season of aluminum consumption. Although aluminum prices continue to rise, leading to rising cost side, and enterprises have a strong fear of high prices, terminal orders have been relatively full, and there are still many optimists about future prices. As the inflection point of the consumer side has not arrived, rigid demand still exists, short-term aluminum prices should not be pessimistic.

As of May 24, the data showed that the domestic aluminum ingot social inventory was 990000 tons, 30000 tons lower than last week, which was lower than the level of the same period in recent three years from a seasonal point of view. Since the beginning of April, the decline rate of aluminum ingot inventory shows signs of slowing down. In terms of aluminum bars, the mainstream processing cost of aluminum bars in South China has risen to 780-880 yuan / ton, and the highest price in the market has risen to more than 1000 yuan / ton recently, reflecting the stable demand in the downstream. According to the feedback of profile enterprises, the inventory of raw materials is low and the downstream orders are saturated, but the current high price affects the willingness of enterprises to replenish the warehouse. Once the aluminum price falls, the enterprises will prepare the warehouse.

To sum up, in the near future, there will be some bad news in the macro aspect, but the consumption in the industrial end will maintain stability, and the lower aluminum price will probably stimulate the lower reaches to buy on bargain hunting and lock in the cost. It is expected that the aluminum price will mainly fluctuate in the range of 17000-20000 yuan / ton from May to June, and downstream enterprises can consider buying on the cheap to lock in the cost（ Author’s unit: China CITIC construction investment Futures Co., Ltd