Aluminum prices will move forward in the future in contradictions and collisions

Domestic industrial policy will dominate aluminum prices

Oversupply eventually caused aluminum prices to plummet in 2015, and the market forced companies to reduce production
spontaneously.
With the sharp rise in aluminum prices in 2016, profit repair has made aluminum companies accelerate production, if not restricted, the domestic aluminum operating capacity in 2017 will reach 39.
27 million tons, and the supply is becoming more and more excessive
.

In the detailed tasks of the "2017 Air Pollution Prevention and Control Work Plan for Beijing-Tianjin-Hebei and Surrounding Areas", the production of electrolytic aluminum plants in the heating season is limited by more than 30%; Alumina enterprises limit production by about 30%; If the carbon enterprise fails to reach the special emission limit, all production will be stopped, and if the special emission limit is reached, the production limit will be more than
50%.
For coal-fired generating units (including captive power plants), all production
stops that have not reached the bottom of the bottom discharge.
At the same time, the 2017 government work report pointed out that this year it is planned to phase, stop and slow down the construction of 50 million kilowatts of coal power capacity
.
The environmental protection plan involves the construction capacity of electrolytic aluminum accounting for 28% of the current national proportion, and the operating capacity accounting for 32% of the national proportion, which means that the reduced production capacity reaches 3.
684 million tons, which is equivalent to 1.
135 million tons
of electrolytic aluminum output in four months of the heating season.
However, in the short term, there is little impact on the current aluminum supply, and it will have to wait for the further implementation
of the policy.

In addition, this year, the central environmental protection supervision will cover the whole country for the
first time this year.
With the deepening of environmental protection supervision, the cost of environmental protection for aluminum enterprises will increase, which will help accelerate the elimination of backward production capacity
.
How to prevent the recurrence of backward production capacity after environmental protection inspections will test the severity of environmental protection inspections this year
.

Lun aluminum stocks are decreasing, and there is an oversupply in China

Since the beginning of the year, domestic electrolytic aluminum stocks have gradually increased
.
Social stocks have gradually increased from 363,000 tons at the beginning of the season to 1.
159 million tons at the end of the season, and the seasonal inventory pressure is obvious
.
From January to February, the national electrolytic aluminum output was 5.
98 million tons, an increase of 20.
9% year-on-year, and the output in the same period last year was 4.
944 million tons
.
In terms of the new and resumed production of electrolytic aluminum, 300,000 tons of new and resumed production capacity were added in January and 350,000 tons were resumed in February
.
From January to February, the growth of domestic electrolytic aluminum consumption (AIJI, net value, information) was relatively stable, among which, automobile lightweight, rail transit and other aspects of consumption were better, an increase of about 9.
5%-10%; Building profiles and wires and cables fell by about 3%-4%
due to the Spring Festival holiday.
From January to February, domestic aluminum exports were about 550,000 tons, down about 30,000 tons from the same period last year
.

Overseas London aluminum performed strongly under the influence of reduced inventory and limited new production, while domestic aluminum prices were more entangled under the influence of oversupply
.
With the improvement of industry profits, it is expected that the operating capacity of electrolytic aluminum will continue to rise, and consumption will be difficult to maintain last year's high growth level
.
Abroad, LME aluminum stocks gradually fell from 2.
2 million tons at the beginning of the quarter to 1.
95 million tons
at the end of the quarter.
From the perspective of LME inventory distribution, LME aluminum stocks in North America and Europe have fallen sharply, down 60,000 tons and 190,000 tons respectively year-to-date, and LME inventories in Asia have been relatively stable year-to-date, but the volume of warehouse in and out of South Korea and Japan has increased
significantly.
It is understood that in 2017, there was no large production capacity in the Americas and Europe, and the overseas production capacity was mainly concentrated in developing countries such as India, and the increase in production capacity was limited
.
Some overseas aluminum areas have risen to the shore premium, driving the price of London aluminum to rise
sharply.
Domestic industrial policy will become the main factor affecting the fluctuation of
aluminum prices.
It is recommended that aluminum prices be short and long, and move forward
cautiously.