Analysis of aluminum price trend in the domestic spot market in January

Macro: Domestically, with the Ministry of Industry and Information Technology clarifying the notice of capacity replacement of electrolytic aluminum enterprises, the capacity under construction postponed by policy factors in 2017 will be gradually put into operation, and China will put into production of 1.
402 million tons
of electrolytic aluminum production capacity in the first quarter of this year.
Under the stable situation of domestic demand, the supply is increasing, and the increase in domestic electrolytic aluminum production capacity has inhibited the rise
in aluminum prices.
Abroad, relatively speaking, the recent weakness of the US dollar or the rare good news of the aluminum market, but the impact of the external market on the domestic market is still relatively limited
by the exchange rate and other factors.
The latest data showed that the US ADP employment data data was significantly better than market expectations, and the probability of the Fed's interest rate hike in March increased against the background of a continued strong economy, and the external aluminum price fell
under pressure.

Market: At the beginning of the new year, the current aluminum market performance is relatively general, the period of aluminum hovers at a high level, the downstream for aluminum prices still have a certain fear of heights, so the former aluminum prices mostly in the range of 14,000-15,000 yuan, and the rise shows more weak
.
Subsequently, aluminum prices fell significantly, and the downstream willingness to receive goods has improved to a certain extent, but in mid-to-late January, the downstream gradually entered a holiday state, and the demand for aluminum ingots is gradually declining, even if aluminum ingots show a volatile downward situation at the end of the month, and the holders are forced by financial pressure to also show a positive shipment attitude, but the overall performance of the downstream is still not ideal
。 East China aluminum prices first rose and then fell, at the beginning of the month due to heavy snowy weather, market transportation was blocked, the arrival of aluminum ingots was restricted, and the willingness of holders to raise prices was strong, but as the weather improved, transportation was smooth, the market appeared concentrated arrivals, coupled with the unfavorable factors of the poor fundamentals of aluminum itself, aluminum prices began to decline
.
South China aluminum ingot prices also showed a trend of rising first and then falling, the sales of aluminum rods and aluminum ingots in the first and middle of the year were acceptable, the willingness to stock up before the downstream holiday increased, the market received goods, the market supply was more sufficient, and the transaction volume decreased in the second half due to the holiday of enterprises
.

In terms of inventory: in the last week of the end of the month, the trend of Lun aluminum inventory maintained a downward trend, the latest inventory reported 1077650 metric tons, and a total of 3775 metric tons of inventory was reduced during the week, a decrease of about 0.
35%; The total stock of aluminum on the Shanghai Futures Exchange was 795318 tons, an increase of 4,360 tons, or about 0.
55%,
from last week.
This month, Lun aluminum inventory continued to show a downward trend, Lun aluminum inventory decline to bring some support to the price trend of Lun aluminum, from the trend, Lun aluminum inventory will still be in a downward trend
.
Contrary to the trend of Lun aluminum inventory, the inventory of the Shanghai exchange continued to grow, and reached a new high this month, although the growth rate has slowed down, mainly concentrated in the increase in market stocking at the end of the year, but it does not change the sharp increase
in domestic inventory pressure.
In addition, as of January 29, 383,000 tons in Shanghai, 736,000 tons in Wuxi, 119,000 tons in Hangzhou, 276,000 tons in the South China Sea, 153,000 tons in Gongyi, 24,000 tons in Chongqing, 56,000 tons in Tianjin, 21,000 tons in Linyi, and 1.
768 million tons in aluminum ingots in the eight mainstream consumption places, reaching a new high
.

Aftermarket analysis: As the US dollar index continues to weaken, the general rise of base metals in the external disk drives the domestic nonferrous varieties upward, but the fundamentals of the domestic aluminum market are weak, it is difficult to be effectively boosted, and the pattern of external strength and internal weakness is difficult to change
.
Domestic downstream consumption is about to stagnate during the Spring Festival, inventories have entered a stage of accumulation again, and the absolute price of aluminum will fall again to seek a new balance
.
However, under the constraints of supply-side reform, the margin of safety of aluminum prices has become clear, which is no longer enough to cause market panic
.
When the price touches the cost area and the capacity is not as expected, the price has the motivation
to rise again.
Aluminum prices will find a new balance point after falling below the important support of 14500 yuan / ton, 13800 yuan / ton is expected to become an effective support for this round of weak market, and it is expected that aluminum will continue to fluctuate in
February.