Shanghai aluminum has been bearish since late February, and the decline has followed a wave. The recent Libyan crisis continued to lift global oil prices, followed by Japan’s major earthquake and nuclear leakage. Coupled with the continued introduction of China’s monetary tightening policy, Shanghai Aluminum’s price dropped below 16500. Due to the rigid cost, Shanghai Aluminum gradually stabilized in the 16500 area, and the bottom was gradually consolidated.
The superposition of policies has put commodities under pressure and the People's Bank of China has again raised the deposit reserve ratio by 0.5 percentage points to 20% since March 25. This is the ninth time the central bank has increased the bank’s deposit reserve ratio since last year, and the current bank The deposit reserve ratio is as high as 20%, which is a historical high since the normalization of China’s monetary policy. According to calculations, this time around 356 billion yuan of frozen bank funds, the continued tightening of monetary policy makes the market liquidity further tightened, objectively put pressure on the commodity market.
Judging from domestic regulatory measures, monetary policy still has room before inflation is effectively controlled. The superposition of various policies will become more and more obvious, and the impact on the real economy will gradually emerge. Especially for SMEs, the financial pressure will become more and more obvious, and the risk of superposition of domestic policies is gradually increasing. At present, large-scale enterprises are less affected, but if the pace of regulation is accelerated or the time for regulation and control continues to be long, the follow-up impact may be gradually reflected. In the case of the aluminum industry, some aluminum companies may be under greater financial pressure, which will increase the wait-and-see sentiment towards the commodity market.
The unavoidable problem of oversupply Although the problem of the global supply of electrolytic aluminum is a commonplace, the fact is that it cannot be avoided. According to the latest data released by the International Aluminum Association (IAI), the average daily output of primary aluminum in February increased to 69,600 tons, which was revised to 68,900 tons in January. In February, the total output of primary aluminum was 1.949 million tons, an increase of 133,000 tons from the same period of 2010, and was revised to 2.235 million tons in January. The data released by the World Bureau of Metal Statistics (WBMS) earlier showed that in 2010, the global aluminum market had a surplus of 577,700 tons. The agency also said that in 2010 the global primary aluminum consumption increased to 40.218 million tons in 2009 to 3.5073 million tons. Last year, the global output of primary aluminum was 40.795 million tons, which was 36.974 million tons higher than the previous year.
According to the latest report from the American Aluminum Association, aluminum shipments from US and Canadian manufacturers in 2010 increased by 12.6% from 2009. According to the association’s estimation, domestic shipments of US and Canadian producers (excluding cross-border trade) reached 1.5 billion pounds in December 2010, up from 1.47 billion pounds in the same period in 2009. The report showed that aluminum shipments in North America increased significantly to 20.08 billion pounds in 2010, exceeding the 17.83 billion pounds in 2009. From this point of view, the problem of global overcapacity will remain in 2011, and the space for aluminum prices will continue to be limited.
Dollar and geopolitical factors increase the instability of prices The US dollar index once again touched 75 support after a year or more, hitting a new low since December 2009. Although the US dollar index has recently recovered, the pattern of weakness is still quite obvious. As the current US dollar index is still at a historically low level, and the recent weak trend is difficult to reverse, and thus constitute a certain support for aluminum and other commodities. As for Japan’s nuclear leakage crisis and Libya’s political situation, concerns about Japan’s nuclear leakage crisis have slowed down. The focus of attention has shifted to the future demand for bulk commodities after Japan’s post-disaster reconstruction. However, the recent rising oil prices are positive. The global economy, which is in a period of recovery, is not a good thing. In a short period of time, it suppresses the demand for commodities by economic entities to some extent, and increases the instability of aluminum's commodity prices.
China's gradual release of production capacity pressure on the market According to the China Electricity Council, China's total electricity consumption from January to February was 702.5 billion kwh, an increase of 12.3% year-on-year. Among them, electricity consumption in the four major industries of non-ferrous metal smelting, chemical industry, building materials, and iron and steel smelting increased by 9.4% year-on-year, accounting for 32.7% of the total electricity consumption in society. The growth rate and the proportion of electricity consumption in the entire society were higher than in the fourth quarter of last year. It is restored. The data shows that the use of electricity in the four key industries such as non-ferrous metal smelting has significantly recovered.
Affected by the government's elimination of outdated production capacity and energy-saving emission reduction policies, domestic electrolytic aluminum production capacity slowed down or partially restricted production in the second half of 2010. It is reported that as a major province of primary aluminum production, Henan Province was affected by energy conservation and emission reduction in 2010. In the fourth quarter of last year, nearly 30% of production capacity was shut down. Since 2007, the output of primary aluminum in Henan province has been about 1/4 of that in the country. With energy saving and emission reduction as a whole meeting standards, electrolytic aluminum will usher in a new round of capacity restart or capacity expansion in 2011. With the restoration of production capacity, the supply and demand of the domestic electrolytic aluminum market will become more relaxed and will exert significant pressure on Shanghai Aluminum's price.
Overall, electrolytic aluminum, as a product with long-term excess production capacity, lacks the imaginative space for rising prices and can only crawl slowly in the recovery of demand. Due to the inflation and cost factors this year, the aluminum price below 16500 is also quite unimaginative. We can use 16500 yuan/t as a reference midpoint for the long-term aluminum price to perform related hedging operations.
The superposition of policies has put commodities under pressure and the People's Bank of China has again raised the deposit reserve ratio by 0.5 percentage points to 20% since March 25. This is the ninth time the central bank has increased the bank’s deposit reserve ratio since last year, and the current bank The deposit reserve ratio is as high as 20%, which is a historical high since the normalization of China’s monetary policy. According to calculations, this time around 356 billion yuan of frozen bank funds, the continued tightening of monetary policy makes the market liquidity further tightened, objectively put pressure on the commodity market.
Judging from domestic regulatory measures, monetary policy still has room before inflation is effectively controlled. The superposition of various policies will become more and more obvious, and the impact on the real economy will gradually emerge. Especially for SMEs, the financial pressure will become more and more obvious, and the risk of superposition of domestic policies is gradually increasing. At present, large-scale enterprises are less affected, but if the pace of regulation is accelerated or the time for regulation and control continues to be long, the follow-up impact may be gradually reflected. In the case of the aluminum industry, some aluminum companies may be under greater financial pressure, which will increase the wait-and-see sentiment towards the commodity market.
The unavoidable problem of oversupply Although the problem of the global supply of electrolytic aluminum is a commonplace, the fact is that it cannot be avoided. According to the latest data released by the International Aluminum Association (IAI), the average daily output of primary aluminum in February increased to 69,600 tons, which was revised to 68,900 tons in January. In February, the total output of primary aluminum was 1.949 million tons, an increase of 133,000 tons from the same period of 2010, and was revised to 2.235 million tons in January. The data released by the World Bureau of Metal Statistics (WBMS) earlier showed that in 2010, the global aluminum market had a surplus of 577,700 tons. The agency also said that in 2010 the global primary aluminum consumption increased to 40.218 million tons in 2009 to 3.5073 million tons. Last year, the global output of primary aluminum was 40.795 million tons, which was 36.974 million tons higher than the previous year.
According to the latest report from the American Aluminum Association, aluminum shipments from US and Canadian manufacturers in 2010 increased by 12.6% from 2009. According to the association’s estimation, domestic shipments of US and Canadian producers (excluding cross-border trade) reached 1.5 billion pounds in December 2010, up from 1.47 billion pounds in the same period in 2009. The report showed that aluminum shipments in North America increased significantly to 20.08 billion pounds in 2010, exceeding the 17.83 billion pounds in 2009. From this point of view, the problem of global overcapacity will remain in 2011, and the space for aluminum prices will continue to be limited.
Dollar and geopolitical factors increase the instability of prices The US dollar index once again touched 75 support after a year or more, hitting a new low since December 2009. Although the US dollar index has recently recovered, the pattern of weakness is still quite obvious. As the current US dollar index is still at a historically low level, and the recent weak trend is difficult to reverse, and thus constitute a certain support for aluminum and other commodities. As for Japan’s nuclear leakage crisis and Libya’s political situation, concerns about Japan’s nuclear leakage crisis have slowed down. The focus of attention has shifted to the future demand for bulk commodities after Japan’s post-disaster reconstruction. However, the recent rising oil prices are positive. The global economy, which is in a period of recovery, is not a good thing. In a short period of time, it suppresses the demand for commodities by economic entities to some extent, and increases the instability of aluminum's commodity prices.
China's gradual release of production capacity pressure on the market According to the China Electricity Council, China's total electricity consumption from January to February was 702.5 billion kwh, an increase of 12.3% year-on-year. Among them, electricity consumption in the four major industries of non-ferrous metal smelting, chemical industry, building materials, and iron and steel smelting increased by 9.4% year-on-year, accounting for 32.7% of the total electricity consumption in society. The growth rate and the proportion of electricity consumption in the entire society were higher than in the fourth quarter of last year. It is restored. The data shows that the use of electricity in the four key industries such as non-ferrous metal smelting has significantly recovered.
Affected by the government's elimination of outdated production capacity and energy-saving emission reduction policies, domestic electrolytic aluminum production capacity slowed down or partially restricted production in the second half of 2010. It is reported that as a major province of primary aluminum production, Henan Province was affected by energy conservation and emission reduction in 2010. In the fourth quarter of last year, nearly 30% of production capacity was shut down. Since 2007, the output of primary aluminum in Henan province has been about 1/4 of that in the country. With energy saving and emission reduction as a whole meeting standards, electrolytic aluminum will usher in a new round of capacity restart or capacity expansion in 2011. With the restoration of production capacity, the supply and demand of the domestic electrolytic aluminum market will become more relaxed and will exert significant pressure on Shanghai Aluminum's price.
Overall, electrolytic aluminum, as a product with long-term excess production capacity, lacks the imaginative space for rising prices and can only crawl slowly in the recovery of demand. Due to the inflation and cost factors this year, the aluminum price below 16500 is also quite unimaginative. We can use 16500 yuan/t as a reference midpoint for the long-term aluminum price to perform related hedging operations.
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