The epidemic has gradually been controlled, and production has resumed in the downstream of the aluminum market

Affected by the new crown pneumonia epidemic, the resumption of work of downstream enterprises after the Spring Festival is generally delayed by more than a week compared with previous years, so the accumulation time of aluminum ingots this year is also longer
than in previous years.
In this context, aluminum prices opened sharply lower after the holiday
.
Recently, with the gradual control of the epidemic, downstream production has resumed one after another, and aluminum prices have recovered
.

From the analysis of changes in domestic aluminum ingot social inventory, the situation of relatively tight domestic aluminum ingot supply is still continuing
.
Statistics show that the domestic electrolytic aluminum social inventory increased by about 190,000 tons during the Spring Festival, which was basically the same as the increase in the same period last year and slightly higher than the average level
of the same period in the past six years.
In the two weeks after the Spring Festival to February 17, the social stock of aluminum ingots increased by about 280,000 tons
.
From the perspective of inventory increment, the growth of aluminum ingot social inventory this year has not changed significantly compared with previous years, especially considering that this year is affected by the epidemic, on the one hand, the Spring Festival accumulation time is extended, on the other hand, the epidemic's restrictions on personnel circulation have caused transportation disruption in some northern areas, which in turn has caused a decrease in the supply of aluminum water and an increase
in enterprise ingots.
Therefore, we believe that the current supply and demand pattern of aluminum ingots is basically the same as the
same period last year.

From the analysis of the number of new production capacity, although Yun Aluminum Yixin and Yunnan Shenhuo have invested some production capacity one after another, the overall production scale is significantly lower than the actual gap of nearly 1.
2 million tons last year, and there is no need to worry too much about the increase in supply in the short term, at least before the end of the spring market, the domestic aluminum ingot supply will not appear significantly excessive
.

Since last week, domestic production enterprises have begun to resume work one after another, and it is expected that the speed of resumption of production will accelerate this week and the scale will be further expanded
.
The data shows that the new confirmed and suspected cases nationwide have dropped significantly, and the new cases in Hubei Province are also rapidly decreasing, and some experts even believe that the "inflection point" of the epidemic may have
arrived.
At the same time, with the improvement of the epidemic and the increase of economic downward pressure, various places have begun to gradually resume work and production, which has positive significance
for the recovery of downstream consumption.

In addition, there are other potential benefits
for the aluminum market in the near future.
First of all, most of the downstream of aluminum is durable goods demand, so aluminum demand will only be delayed and will not disappear, and aluminum demand is likely to break out
after the epidemic subsides.
Secondly, due to the increased downward pressure on the economy caused by the epidemic, the previous prudent monetary policy has shown signs of gradual relaxation, and the original active fiscal policy may also be further increased, and the overall macro environment is improving
.
Finally, the spring market of "gold three silver four" itself has a high degree of
certainty.
From the situation of previous years, aluminum prices in most years will rise for a period of time after the Spring Festival and remain strong until about the middle of the second quarter, and we believe that this year's aluminum prices will be no exception
.

In summary, the probability of short-term aluminum prices continuing to recover is relatively large, and it is expected to touch 14,000 yuan / ton
in the second quarter.
It should be noted that although the supply of aluminum ingots is tight in the short term, there are still large growth expectations for supply during the year, and the pressure on aluminum prices in the second half of the year will gradually increase
.
Operationally, it is recommended that you can buy 2004 or 2005 contracts at low prices, and choose the opportunity to take profit
above 14,000 yuan / ton.
In addition, affected by the poor transportation of aluminum water and the fact that downstream demand has not fully recovered, aluminum front-month contracts are significantly weaker, and with the orderly resumption of work, this situation will be corrected, so you can try to buy front-month contracts and dump far-month contracts
.