Market sentiment has cooled Shanghai aluminum short-term beware of chasing high risks

The impact of the power shortage and the dual control policy on energy consumption continues to ferment, and the contraction of Shanghai aluminum supply is still the main contradiction in the market: Recently, the Yulin Municipal Development and Reform Commission issued a notice on ensuring the completion of the 2021 energy consumption dual control target task, requiring Yulin electrolytic aluminum enterprises to reduce production by 50% in September, the power supply department to limit power control by 50%, Yulin's current electrolytic aluminum production capacity is 630,000 tons, and it is expected to reduce production capacity by about
300,000 tons.

Since the beginning of summer, the load of Southern Power Grid has repeatedly reached new highs, power has continued to be tight, and the impact of power cuts has affected Yunnan, Guizhou, Guangxi and other provinces, and production has been reduced by about 1.
56 million tons, accounting for 3% of the national operating capacity.
Affected by the National Development and Reform Commission's requirement to take effective measures to ensure the completion of the 2021 dual control target for energy consumption, electrolytic aluminum enterprises in many provinces have been forced to limit production, with Mongolia reducing production by 417,000 tons in the previous period and about 448,000 tons in Xinjiang in the second half of the year, accounting for a total of 2% of the country's operating capacity; Recently, Guangxi has also introduced a dual control policy on energy consumption, which is expected to further reduce production by about 430,000 tons
on the basis of the production reduction in July and August.

On the basis of supply constraints, electrolytic aluminum demand also showed firm, downstream processing enterprise orders did not show signs of weakening significantly due to the consumption off-season, aluminum rod production in August increased by 11.
62% year-on-year, aluminum rod production increased by 11.
19%
year-on-year.
At present, the social inventory of electrolytic aluminum has been at a low level in the past five years, with the arrival of the peak season, the supply and demand of electrolytic aluminum increases, and the destocking is expected to accelerate, and the inventory may fall to a very low position
by the end of the year.

In summary, under the background of the intensification of power shortage and the tightening of dual control of energy consumption, the production capacity of electrolytic aluminum in the third quarter may be further expanded, superimposed on the new production capacity in the year or hopeless, the shutdown capacity is difficult to recover, with the gradual recovery of consumption, the price center of electrolytic aluminum is expected to move further up, it is recommended to continue to hold in the early stage; The recent rise in aluminum has accelerated, volatility has intensified, and short-term beware of chasing high risks
.