Shanghai aluminum is expected to maintain shock as

The demand for replenishment gradually weakened, and Shanghai aluminum is expected to remain volatile

recently, Shanghai aluminum futures continued to weaken. As of yesterday's close, the main 1803 contract closed at 14335 yuan/ton, down 1.07%, creating a "three consecutive negative". According to the analysis of market participants, due to the holiday and shutdown before the holiday, the demand for inventory replenishment in the downstream gradually weakened, which failed to support the aluminum price. The support of demand variables lies in whether the consumption after the holiday and downstream construction recover quickly. In the short term, aluminum prices may be dominated by shocks. In the long run, with the full digestion of the capacity reduction policy, the trend of aluminum prices in 2018 will be more fundamental. Under the supply and demand game, aluminum prices are difficult to be optimistic

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the demand is weak. Shanghai aluminum is under pressure

since the beginning of the year, the main 1803 contract of Shanghai aluminum has continued to decline, falling from 15362 yuan/ton to 14335 yuan/ton, with a significant decline. From yesterday's position, the increase of multiple orders was significantly lower than that of empty orders. On the same day, there were 233616 multiple orders and 276335 empty orders, of which, the empty orders of CITIC futures trading seat increased by 1930, holding a total of 44339, and the empty orders of Nanhua futures trading seat increased by 2344, holding a total of 20185

market participants believe that weak demand continues to weaken Shanghai aluminum. According to the practice of previous years, smelting plants generally do not shut down during the Spring Festival. All parties take a wait-and-see attitude towards this, while downstream processing enterprises shut down on holidays, and demand basically stagnates. At the same time, due to the tight railway capacity and the influence of weather factors, the inventory of smelters accumulated around the Spring Festival, and these overstocked inventory will be transferred to the inventory distribution center in large quantities after the festival. With the commencement of construction in the downstream after the festival, the inventory is gradually digested. Therefore, before and after the Spring Festival is a traditional seasonal accumulation stage. According to statistics, during the period from two weeks before the Spring Festival to the 15th day of the first month in previous years, the spot inventory of aluminum ingots will accumulate 300000-500000 tons. At present, the social inventory level is at a historical high of more than 1.7 million tons, and the inventory in the first quarter may accumulate to 2.2 million tons

Li Kewen, an aluminum researcher at Jinrui futures, said, "the news before the holiday is weak, the downstream is gradually shut down for holidays, and the bulls have no willingness to attack for the time being. Most of the high inventory has kept the value preservation disk, and the aluminum price shock is weak. At present, the short side news is more obvious, the inventory continues to accumulate, and the consumption is off-season, but various interest rates have not been fermented, so we continue to wait for the message guidance."

however, at present, the demand for electrolytic aluminum in the international market is still strong, and the LME aluminum price remains high, which will also support the domestic aluminum price

Li Kewen believes that the sharp decline in aluminum prices will be limited by the changes in the accumulation and removal of stocks before and after the Spring Festival, whether the export data exceed expectations, the resumption of production after the festival, the shortage of overseas markets, and the improvement of the domestic long-term supply-demand balance. Therefore, investors are advised to buy at a low price and wait for the recovery of consumption after the festival

the supply and demand game will determine the trend of the whole year

from the long-term trend, the aluminum price in 2018 will be difficult to repeat the big market in 2017. Liu Xiaolei, a senior analyst in Shanghai Nonferrous aluminum industry, believes that since the supply side reform has been digested and completed in 2017, the supply and demand game in 2018 will determine the market trend. At present, the trend of supply exceeding demand is relatively obvious, and the stable extrusion volume and price of aluminum in the first half of the year is not optimistic

from the supply side, the inventory of aluminum ingots continues to increase. According to the data, on February 1, SMM's domestic electrolytic aluminum social inventory (including SHFE warehouse receipts) showed that 385000 tons in Shanghai, 727000 tons in Wuxi, 272000 tons in Nanhai, 119000 tons in Hangzhou, 158000 tons in Gongyi, 56000 tons in Tianjin, 24000 tons in Chongqing, 22000 tons in Linyi, and 1763000 tons of aluminum ingots in eight places. "Compared with the same period in 2017, the social inventory of the eight places has increased by more than 120%, and there is great pressure on the supply side." Liu Xiaolei said

at the same time, with the gradual digestion of the capacity reduction policy, the new capacity gradually rises from the bottom. In December, the domestic electrolytic aluminum production capacity increased from about 36million tons to about 37million tons, and the trend of capacity rise is obvious. In 2018, the new electrolytic aluminum production capacity is expected to reach 4.84 million tons, mainly concentrated in Inner Mongolia, Guangxi, Guizhou, Shanxi, Xinjiang and other places. The indicators of new electrolytic aluminum production capacity come from the indicators of equal or reduced replacement of electrolytic aluminum production capacity eliminated from 2010 to 2017. Liu Xiaolei said that the low marginal cost of new capacity may continue to drag down aluminum prices

"the pressure on aluminum prices will be greater in the first half of the year. After the second half of the year, if there is capacity withdrawal and demand can remain high, aluminum prices may be supported to a certain extent, but there is little chance of a comprehensive reversal of fundamentals." Liu Xiaolei said