Shanghai Aluminum Monthly: Maintaining a weak market pattern with low oscillation

Shanghai Aluminum Monthly: The weak market pattern that maintained the low oscillations followed the oscillation of the US dollar. In June, LME aluminum continued to oscillate and rose slightly. The price starts at $1,705 in the current month, the current high of $1,738, and the low of $1612. The current month's report closes at $1719, up from the previous month's close by $24. After a sharp oscillation in May, Shanghai Aluminum continued to oscillate downwards in June. Volume and open interest continue to shrink. At the end of the month, the total holdings of Shanghai Aluminum fell to 82,800 tons, which was the lowest level since 2004. Relative to the external market, the trend of Shanghai Aluminum was relatively weak. At the end of June, the price ratio between Shanghai Aluminum and LME three-month aluminum narrowed to around 9.2. The overall pattern of low oscillations is maintained. The main 0410 contract opened at 16,550, the monthly higher price was 16,620 yuan, the lower price was 15,350 yuan, and it closed at 15,740 yuan, down 660 yuan from the previous month. The divergence of aluminum prices at home and abroad is mainly due to the differences between domestic and foreign fundamentals. From the point of view of the international market, the demand for aluminum in the international market has remained relatively good as a result of the good momentum of global industrial production that has led to the consumption of aluminum. In June, the LME aluminum contract tightened between the premiums, LME spot a slight premium, Japan's three-quarter spot premium reached 6-7 years higher 83-86 US dollars. The US Midwest premium also stayed above 7 cents. Changes in the spot premium also support the rise in aluminum prices. The continuous decline in LME aluminum inventories is also an important reason supporting the rise in aluminum prices. LME aluminum inventories continued to decline sharply in June. The mid-month inventories fell below the 1 million-ton mark, and the monthly low inventory fell by about 940,000 tons. However, the drastic decline in stocks is not particularly noticeable for the price, but it can be seen from the changes in spot premiums and discounts and the decline in inventories that the fundamentals of international aluminum are improving. The reason for the sharp decline in stocks is that apart from maintaining good demand, the decline in output is another important factor. The aluminum industry association stated in a relatively new report that the annual output of primary aluminum in the United States in June fell by 2.6% from May and 7.4% from the same period of last year. In the United States, the annual output of primary aluminum in June fell 2.6% from May, and was 7.4% lower than the same period of last year. Basically still not optimistic in the country, the first pressure on the price or come from a large domestic inventory, inventory of the Shanghai Futures Exchange from November 2003 to June, inventory has been steadily increased, until the end of the month, the Shanghai Stock Exchange stock It has reached more than 137,000 tons. However, the growth rate of domestic electrolytic aluminum production has not yet eased. In May, domestic electrolytic aluminum output was 543,000 tons, which was 25% higher than the same period of last year, which is higher this year. On the other hand, it is expected that the consumption will be reduced, and aluminum companies will use low inventory to purchase. The direct performance is that the market's visible inventory continues to increase. By mid-month, the spot inventory in the South China Sea will be 100,000 tons, and the inventory in Shanghai will reach 200,000 tons. Although theoretically, the domestic aluminum price is lower than that of LME aluminum, there is an arbitrage transaction to buy aluminum from Shanghai Aluminum, which also helps ease domestic inventory pressure. However, due to the current policy uncertainty. Export channels are limited, so the amount of exports will also be limited. However, due to the influence of macroeconomic regulation and control on domestic aluminum, demand has been constrained and the inventory pressure needs to be digested. The effect of limited supply on the market will also take time. At the same time, the financial pressure caused by the credit crunch will still have a large impact on the market. Therefore, under the combined effects of multiple factors, the domestic aluminum market remains weak. Stay for a while. From the cost factor point of view, although some time ago the Development Commission raised the price of electricity to ease the current supply peak supply contradiction during the peak period. Due to the difference in electricity prices for the electrolytic aluminum market, for the 14 large companies, the price adjustment has been relatively low since it has already received preferential treatment. Therefore, it has little impact on this. Therefore, the increase in electricity prices is reflected in the cost of only about 300 yuan. The other important factor in the cost of alumina has been the recent decline. The drop in imported alumina prices was mainly due to the decrease in Chinese buyers, which led to a drop. The price of domestic imported alumina dropped to 340-350 USD at the end of June. China's alumina prices also have the possibility of a downward adjustment. Therefore, the reduction in alumina prices will have a greater impact on aluminum prices than the increase in electricity prices. In general, the support line for electrolytic aluminum costs will be lowered, and the support for aluminum prices will be weakened. From the trend point of view, the aluminum price in early June has begun to rebound in the initial week, began to rebound in the middle of the month, and closed two consecutive weeks Yang Xian and the momentum of the upward trend remains better. In particular, the end of the month broke through the pressure line formed by two highs of 1,626 US dollars and 1,623 US dollars on June 2 and 21. More constructive. Of course, the breakthrough needs to be further confirmed by the market. If the price can stabilize on this line and continue to rise, then the aluminum price will change greatly from the trend pattern. The period price will break the descending triangle formed after a sharp decline. The market will continue to test 1740-1775 U.S. dollars. If the period back below the trend line, the weak pattern will continue. Shanghai Aluminum maintained the downward triangle oscillation formed by the pressure line consisting of 16650 yuan and 16180 yuan for 16650 yuan for the first two cakes, and the low point of 15,190 yuan, and the support line of 15,350 yuan. This was due to the fact that the two turnovers and the open interest remained at a relatively low level. The pattern is hard to break. Although it is not ruled out that the rise in external disk and Shanghai copper will lead Shanghai Aluminum to make up for the increase, individuals think that in the absence of domestic fundamentals, aluminum prices will have limited room for growth in the short term. After the market will continue to maintain the weak market pattern of low oscillation. (Huixin Futures)