After the resumption of work, aluminum prices may accelerate their rise Waiting for the inventory inflection point to appear

As of the close of trading on February 13, 2020, the Shanghai-aluminum 2003 contract fell by 2.
8% in February, which was relatively firm
among nonferrous metals.
It is expected that in the future, due to the impact of the epidemic on the downstream consumption of aluminum, electrolytic aluminum will continue to accumulate, and aluminum prices may fluctuate
.
After the inventory inflection point appears, aluminum prices may accelerate upward
.

According to the Ministry of Transport, as of February 8, 2020, the total number of passengers sent decreased by 80%.

It is expected that the full resumption of work may not be until the end of February, which is about
four weeks later than normal.

From the perspective of the total inventory of electrolytic aluminum lunar calendar, the general apex occurs 4 weeks
after the holiday.
The total stock before the Spring Festival in 2020 was 920897 tons, and as of February 6, 2020, the inventory was 1247715 tons, an increase of 35%.

According to the current inventory accumulation rate, the peak inventory of this Spring Festival may be about
1.
5 million tons.

During the Spring Festival, due to the impact of the new coronavirus epidemic in China, electrolytic aluminum stocks accumulated
rapidly.
LME stocks and domestic electrolytic aluminum stocks have diverged
significantly.

LME stocks were 1475025 tonnes at the end of 2019 and 1,239,800 tonnes as at 11 February 2020, a decrease of 16%.

Stocks in the previous period were 185127 tonnes at the end of 2019 and 302715 tonnes as at 7 February 2020, an increase of 64%.

At the end of 2019, the spot inventory of electrolytic aluminum was 594,000 tons, and as of February 10, 2020, the spot inventory was 1.
035 million tons, a significant increase of 74%.

The reduction in LME inventories was mainly concentrated in Europe
.
The overall improvement in European PMI has led to aluminum consumption
.

In 2019, the destocking of spot and futures in China was significantly faster than the LME inventory reduction
.
In November 2019, based on the average monthly apparent consumption, the ratio of the total inventory of existing electrolytic aluminum spot and futures to apparent consumption was 0.
35 months, which is still far
from the bottom of 2016 of 0.
12 months.
At the bottom of the last inventory cycle, aluminum prices began to rise in August 2016, from 11,000 to nearly 15,000, close to 35%.

In January 2020, China's PPI was 0.
1 year-on-year, the first time since July 2019 that it turned positive, indicating that the price of industrial products is being transmitted
normally.
The original destocking level of electrolytic aluminum was significantly weaker than the previous round, and the previous round had the impact of supply-side reform, and it is expected that the rise in aluminum prices in the replenishment cycle in 2020 will be much weaker than the previous round
.

However, currently affected by the new coronavirus epidemic, it is expected that after the normal resumption of work, fiscal and monetary policies will lead to a significant increase in demand, the speed of destocking and replenishment will accelerate, and the rise in aluminum prices will increase
.
The accumulation of electrolytic aluminum will be postponed to the end of February, but in the future, the speed of destocking and replenishing inventory by enterprises may accelerate, and aluminum prices may oscillate first and then rise, and it is recommended to do far-month contracts
.