Aluminium market needs to digest the macroeconomic regulation and control of the aluminum industry, the impact of the aluminum industry, the second half --- aluminum market to digest the inventory of the first half of macroeconomic control policies and the future may launch a new policy dominating the domestic aluminum market supply, consumption and import and export development direction . I believe that under the current policy conditions, the domestic aluminum supply pressure is difficult to ease, the market will be the theme of digestion of the inventory, exports will have a certain degree of increase. If new policies are introduced, the possibility of major adjustments in the aluminum industry and rebalancing of supply and demand will also increase. Macro-policy transmission effects 1. Psychological effects have become practical, with medium-term demand slightly affected Macro-control has played a role in aluminum consumption. First of all, after the intensive introduction of macro-control policies, it exerted a relatively large psychological restraint effect on the market. Consumers' expectations of the future were diluted, and traders sold their inventories. Therefore, even if the actual consumption is stable, the market demand has also suffered a relatively large blow. Secondly, from the perspective of the consumer sector, the tightening monetary policy of full-scale macro-control tightened not only the capital of producers, but also the funds of aluminum processors, and thus the market demand for primary aluminum. For the change in the actual consumption of primary aluminum, I believe that the macro-control has a certain lag in the actual demand for consumption, and its effect will gradually show up in the second half of the year. It can be analyzed through China's macroeconomic data in May and June. First, look at industrial production and investment in fixed assets that are more closely related to domestic aluminum consumption. The year-on-year growth rates of the industrial enterprises' completed value in May and June were successively decreased, which were 17.5% and 16.2% respectively. In the quarter, the year-on-year growth rate of industrial production increased slightly; the fixed asset investment increased by 18.3% in May and June respectively. 22.7%. Secondly, from the import data reflecting the demand for raw materials, after China's import growth rate fell to 35.4% in May, it increased again to 50.5% in June, and the demand for raw materials in China remains strong. Therefore, in terms of the overall effect of macroeconomic control, the demand for raw materials, including primary aluminum, remains relatively high for a period of time. In particular, in the major consumption areas of primary aluminum, the medium and long term are not optimistic. Real estate investment experienced a relatively rapid decline, especially as new projects started to decline. Since the use of aluminum in real estate is mainly concentrated after the completion of construction, the reduction in new projects has a considerable inhibitory effect on longer-term aluminum consumption. Automobile production maintains a relatively high speed growth in the short term, but the increase in automobile inventory caused by various reasons will have a greater negative impact on the automobile output and aluminum use in the city. 2. Consequences of expansion of production capacity: Continuous increase in output The impact of macro-control on aluminum production is mainly reflected by industry policies, including increasing the proportion of capital in the industry, increasing electricity prices, eliminating backward technologies, and limiting high pollution. Under strict control, the blind expansion of electrolytic aluminum production capacity has been basically curbed, and aluminum production companies have encountered restrictions on capital bottlenecks. However, a large number of aluminum production cuts did not appear to be significant. The output of primary aluminum continued to increase. From January to June, China's primary aluminum output was 2.554 million tons, an increase of 23.4% over the same period of last year. The reason is that, on the one hand, the excess situation in the domestic aluminum market has not deteriorated to the point where the production companies cannot afford it; on the other hand, the more direct industrial policies have been brewing and have not been implemented. At the end of 2003, the national electrolytic aluminum production scale was 8,338,200 tons, and another 3,098,000 tons were under construction (reconstruction, expansion, and new construction). The new planning project was estimated to have more than 1 million tons. By mid-May 2004, production capacity of 1.47 million tons will be suspended, production capacity will be reduced by 900,000 tons, and capacity under construction will be 1.8 million tons. Based on this calculation, to remove 1,308,800 tons of self-baked tank capacity, plus some capacity under construction, it is expected that the capacity of electrolytic aluminum will be between 7.5-8.5 million tons by the end of 2004, and the annual output will still reach 600-620 million tons. 3. Inventories are gradually digested. From the perspective of supply and demand, the pressure on the domestic primary aluminum market is relatively large but there is no obvious deterioration. However, as mentioned earlier, consumer and traders reduce their inventory holdings, their production response is lagging behind, and net exports have decreased, creating a situation in which large stockpiles of stocks have accumulated. In mid-July, aluminum inventories on the Shanghai Futures Exchange increased to over 150,000 tons. There were 20,000 to 300,000 tons of visible stock in the spot markets of Shanghai and Nanhai. It is estimated that aluminum plants also accumulated about 1,500 to 200,000 tons of stockpiles. . The topic of the domestic aluminum market will be inventory consumption. There are two ways to digest stocks, one is consumption in the domestic market, and the other is export to the international market. The export can be through two ways: feed processing and general trade. Due to the preferential policy for imported alumina, the cost of feed processing is lower and it is easier to achieve than the general trade form. With the current import and export tax rates, exchange rates, aluminum prices at home and abroad, and alumina prices, domestic aluminum producers will be more willing to export their feeds instead of selling aluminum ingots domestically. In addition, if the domestic aluminum market deteriorates further, the export of general trade will also become possible. Therefore, it is expected that China's primary aluminum exports will increase in the second half of the year. There are more uncertainties in industry policies. 1. Uncertainties in policies From the overall data in the first half of the year, the general judgment is that macroeconomic regulation and control has achieved initial results, and the threat of further tightening policy implementation is gradually weakening. However, there are still many uncertainties in the aluminum industry, reflected in the industry policy. The previous expectation of export is based on the existing export tax rebates and feed processing policy unchanged. However, after the original aluminum export tax rebate rate was reduced to 8% in 2004, there are still many controversies regarding the industry's policies, including the cancellation of the export tax rebate rate, limiting the processing of imported materials and increasing export tariffs. 2. Do not rule out a large reduction in production of electrolytic aluminum. If the export environment deteriorates further, the processing of incoming materials and exports of general trade will be suppressed or even stifled, and the pressure on inventory will be concentrated in the domestic market. If the export environment deteriorates, domestic electrolytic aluminum production will be greatly affected, so domestic electrolytic aluminum production industry may not rule out the possibility of a larger scale production or production suspension. The stimulating points include the following aspects: lack of funds, difficulties in purchasing alumina, insufficient power supply, and sustained losses. Reflected in the futures market and prices, the depressed spot situation has stifled investors’ enthusiasm for trading. Domestic aluminum prices have been difficult to escape from a weak trend for a period of time, and there is a high possibility of low level fluctuations. The price ratio of Shanghai Aluminum and London Aluminum will be lower or even further decline. With the gradual digestion of stocks and the improvement of fundamentals, it is expected to gradually pick up.