De-capacity expectations still exist Shanghai aluminum maintains the idea of bargain hunting

Supply-side reforms support aluminum prices
.
According to the production schedule, the production capacity of electrolytic aluminum this year greatly exceeded the demand increment, so the market was pessimistic
about aluminum prices in the early stage.
Moreover, after the production reduction in Xinjiang was less than expected in the early stage, the new production capacity of electrolytic aluminum in the southwest region was put into operation, and the documents for capacity reduction in Shandong and Inner Mongolia were gradually introduced but there was no substantial quantity plan, and the market has maintained a wait-and-see attitude
.
However, the supply-side reform has brought about the expectation of de-capacity in the aluminum market, which has supported aluminum prices
to a certain extent.
At present, production has significantly increased the price of
pressed alumina and electrolytic aluminum.
However, domestic bauxite production is affected by environmental protection, the supply is not as expected, the price is firm, and the price of alumina is difficult to transmit, so it forces alumina production
to decrease.
It is understood that most alumina plants continue the previous high-price procurement contracts, mainly environmental protection supervision makes the raw ore supply tighten and the inventory continues to be low, once the price is lowered, it is likely to lead to a shortage of bauxite supply, affecting the current production, so the supply of alumina will also contract.

At the same time, it is necessary to pay attention to whether the yield limit of anode carbon will affect the production
of electrolytic aluminum in the later stage.
Under the influence of the alumina and carbon markets, coupled with supply-side reforms, the construction of new production capacity has stopped in Xinjiang, and the release of new production capacity in the later period is expected to
slow down or decrease.

The cost side is expected to gradually stabilize.

Due to the rapid growth of alumina production and the situation of oversupply, the price of alumina fell greatly, which also reflected that the growth rate of electrolytic aluminum was less than expected
.
At present, the overall cost has fallen to less than
13,000 yuan / ton.
However, in the later period, the price of alumina and anode carbon is expected to stabilize and continue to rise due to environmental protection problems and the support of its own costs, while electricity costs are also expected
to increase.
At present, the profit of alumina has fallen rapidly to the cost line, forcing alumina enterprises to repair and reduce production
.
It is understood that this maintenance is mainly concentrated in Shanxi and Henan provinces, one is because of the stricter environmental protection inspection, and the other is due to the rising cost of raw materials, which directly affects the production
of alumina.
According to statistics, the alumina production capacity has been shut down for more than 2.
7 million tons, and the oversupply situation is expected to improve, and aluminum prices will stabilize and rise
.
In terms of electricity costs, according to Baichuan Information, the weighted average electricity price of China's electrolytic aluminum according to the operating capacity in April was 0.
2962 yuan / kWh, up 0.
0025 yuan / kWh from March, an increase of 0.
84%.

Coal prices are expected to fluctuate at a high level, but the introduction of carbon emissions trading may also increase the cost of electricity for electrolytic aluminum companies, which cannot be underestimated to increase aluminum prices
.

Supply and demand in the global market are basically balanced
.
Rusal expects global aluminum demand to increase by 5.
5% to 15 million tons
in the first quarter.
During the same period, global aluminum supply increased by 7.
8% to 14.
9 million tons, which means that the market is generally balanced
between supply and demand.
At the same time, it is expected that in the second half of this year, China's
reduction of aluminum excess capacity and the implementation of stricter environmental protection standards will further tighten global aluminum supply.
At present, demand is still growing year-on-year, and automobiles are a bright spot
driving aluminum demand.
Domestic spot inventories began to decline, domestic exchange inventories slowed down, and foreign inventories continued to decrease
.
In addition to the good demand, the decline in domestic spot inventory is also due to
the increase in the proportion of aluminum water output and the reduction of the actual amount of ingots.

To sum up, on the whole, the supply-side reform news or stimulate Shanghai aluminum to show a pulse rise, so it is not recommended to short, and the overall maintenance of the idea of bargain hunting and long
.