The peak season to destocking is coming, laying the foundation for the strong operation of aluminum prices

As the country's intensive policy was converted into orders, the pessimism of electrolytic aluminum downstream faded in the first quarter, and procurement demand pushed aluminum prices up
from the bottom.
The prices of alumina and anode carbon blocks continue to decline, reducing the production cost of electrolytic aluminum, the profits of the electrolytic aluminum industry can be quickly repaired, and the long-suppressed new production capacity has accelerated, mainly reflected in Inner Mongolia, Guangxi and Yunnan
.

According to relevant data, the domestic operating capacity at the end of February was 36.
505 million tons, an increase of 145,000 tons
from January.
From the current progress of new production capacity, the number of new production capacity launched in the second quarter is relatively limited, and the new round of new supply pressure is concentrated in the second half of 2019
.
The increase in supply in the second quarter mainly comes from the successive resumption of production after the heating season of large electrolytic aluminum enterprises in Shandong, involving a production capacity of about 500,000 tons, and after the successful resumption of production, the operating capacity is slightly lower than the level
in 2018.

Apparent consumption of electrolytic aluminum increased by 2.
8% in the first quarter, compared with a growth rate of 1.
2%
in the same period in 2018.
Consumption growth of 2.
8% in the first quarter of 2019 ranked first
among the non-ferrous sectors.
The second quarter is the traditional peak consumption season, real estate completion, high-voltage circuit investment, aluminum export to ensure consumption
.
The application of aluminum in buildings is mainly presented in the form of aluminum doors and windows, aluminum curtain walls and aluminum formwork, of which the largest amount of aluminum used in aluminum doors and windows, which is directly linked
to the completed area.
In 2018, real estate developers were short of funds, driven by the rush to start construction and realize it, the growth rate of construction area rose, and the growth rate of new housing starts was decoupled
from the growth rate of completion.
With the gradual completion of projects under construction, the completed area of real estate in 2019 is expected to record a relatively satisfactory growth, which in turn supports the demand for aluminum in the real estate sector
.

High-voltage lines are the key areas of national investment at the end of 2018, and from the bidding arrangement of high-voltage lines, the order demand for high-voltage cables will be exerted in the second quarter and beyond
.
In 2018, domestic aluminum consumption recorded 4%, of which the rapid growth of aluminum exports contributed to it
.
In terms of the ratio of internal and external disks, the price range since April 2018 is around 7.
3, coupled with the existence of export tax rebates and "one road, one belt" demand, the proportion of aluminum exports in 2019 is expected to be maintained
.
We estimate that the social inventory will dematerialize at about 400,000 tons in the second quarter, and the quarterly consumption growth rate is expected to increase to about
3.
5%.

From April 1, 2019, China's VAT rate reduction policy will be officially implemented, which is the last trading day of the 1903 contract, and there is basically no way to implement more plate sets
.
From March 15 to 31, you can obtain a 16% input invoice by buying spot goods (including aluminum ingots, aluminum processed bars, profiles, etc.
), and at the same time sell on the futures market to lock in the risk
of falling aluminum prices eroding tax point income.
After April 1, sell the goods, issue a 13% output invoice, and close the futures position to realize the risk
of VAT reduction.

In addition to the high purchasing sentiment of traders in the spot market in March, the number of orders placed by downstream customers to intermediate processing enterprises also rebounded
significantly.
This is undoubtedly putting part of the consumption in April, while traders cashed in the tax point to reduce the income, the market inevitably ushered in selling pressure, and eventually the spot premium was squeezed out, returning to the normal premium state, which also put short-term pressure
on aluminum prices.

In terms of operational rhythm, the VAT cut on April 1 disrupted the rhythm of spot demand, resulting in increased potential spot selling pressure in the first half of April
.
Borrowing the spot sell-off in April, when the price is under pressure and pullback, the layout is long, and the target is 14,000 yuan / ton
.
14,000 yuan / ton can cover the complete cost of the industry, and whether it can get better performance or turn short in the future depends on the follow-up of new supply
.