Review the Shanghai aluminum price trend, the aluminum in early August breakthrough pressure of 14500 points in the early and up to 16000 points in the short term, after mid-August to late October at 16000-17000 points sideways more than 2 months, and finally began to fall in early November And fell below 15,000 this week. The drop in aluminum prices was mainly attributed to a weaker-than-expected reduction in heating-season aluminum production, loose supply of aluminum but no improvement in demand, poor production reduction expected, loose supply will continue and aluminum prices will continue to decline at a low level or even further.

First, heating season limited production ineffective

In August, the Ministry of Environmental Protection took the lead in issuing the "Action Plan for Tackling Air Pollution in 2017-2018 in Autumn and Winter in Beijing, Tianjin and the Peripheral Areas." The plan has specific measures and clear entries. It clearly stipulates that "during the heating season, the aluminum smelter will have a production limit of over 30% To stop the number of electrolysis cell count; alumina limited production enterprises 30% of the production line; carbon enterprises can not reach the special emission limits, all discontinued to reach the special emission limits, limited production of more than 50% of the production line meter "The north entered the heating season in November, the actual limited production is not satisfactory. From the alumina point of view, as of November 24, Shandong, Shanxi, Henan Province, the actual production capacity of 4.19 million tons / year limit, is expected to limit production capacity of 57%. In terms of electrolytic aluminum, Shandong Weiqiao, the largest electrolytic aluminum manufacturer in the country, had expected the company to suspend production capacity of over 2.5 million tons before the market news said it will no longer stop production this winter. The reason is that Weiqiao July supply-side reform has stopped a lot of production capacity constraints, limited production capacity in winter and offset. Expected support for limited production Domestic aluminum prices soared sharply in early August. Now disappointed, aluminum prices fell in the reasonable pressure.

Second, the domestic supply of aluminum

At present, the output of primary aluminum in China is still large, and the supply of aluminum products is relatively loose. According to published data, the domestic output of primary aluminum was 2.55 million tons in October, down 6.51% over the same period of last year; the output of alumina was 5.416 million tons, still up 0.91% over the same period of previous year. The monthly output of primary aluminum and alumina showed a year-on-year decrease or increase, showing very little that the government has achieved the effect of reducing excess capacity. However, domestic aluminum output in October was 5.416 million tons, up 8.62 from a year earlier. Aluminum is a downstream product relative to primary aluminum, its output continues to maintain steady growth, also shows that domestic aluminum supply is still abundant. To explain another point is that from January to October China's bauxite imports 55,738,400 tons, with 42,240,700 tons over the same period last year an increase of 13,507,700 tons, or 31.98%. This ensures the supply of raw materials for China's aluminum industry.

Third, the downstream demand is weak

Since entering the winter temperatures dropped, the domestic demand for aluminum to reduce the downstream, especially the real estate boom to reduce the greater impact on aluminum demand. According to the statistics of Nov. 15, from January to October, the accumulative total investment in real estate development nationwide was 90.544 trillion yuan, up by 7.80% over the same period of last year, a deceleration of 0.3 percentage point from January to September 2017. From January to October, the national real estate development enterprise Housing newly started an area of ​​1.45 billion square meters, an increase of 5.60%, the cumulative year-on-year growth rate down 1.2 percentage points from the previous month, down 1.2 percentage points. The main reason for this is that the growth rate of home sales in the second half of this year is less than that in the first half of the year, causing new construction and investment to be dragged down. Into the winter temperatures dropped, real estate starts more affected. Aluminum for construction and real estate accounts for more than 40% of domestic electrolytic aluminum consumption, and aluminum prices are greatly affected by the real estate downturn.

Fourth, high domestic stocks

At present, the domestic aluminum inventories high. As of November 24 last Friday Shanghai aluminum futures sub-total of 694,500 tons, the highest ever inventories. As of the 27th, the domestic aluminum social stock was 1.51 million tons, also record historical highs. High inventory shows that the domestic aluminum supply surplus, the pressure on the formation of prices, aluminum fell easy to fall.

Different from the domestic market, the LME aluminum stock in the international market is 1.12 million tons, much lower than the 5.5 million tons three years ago. However, LME aluminum inventories formed by historical reasons. It is the international speculators in the subprime mortgage crisis in 2008 to establish the process, intended for long-term holdings. At the moment, it is in the process of reducing inventories starting in 2014. LME aluminum stocks will continue to decline further, but the impact on the market is limited.

Fifth, compare the price of aluminum at home and abroad

At present, the price of domestic aluminum futures in Shanghai is relatively low compared with LME aluminum in the international market. According to statistics, in September-October, the closing price of aluminum and aluminum is within the range of 7.7-8. At present, as the domestic aluminum price sharply drops in November, the ratio has dropped to 7.0. Obviously, the international aluminum prices in the early rise in domestic aluminum prices with little upward pressure, while the current domestic aluminum prices fall defensive international aluminum performance. This wave of aluminum prices shows that the main reason is the Chinese factor. Part of the reason for the international aluminum price deflation also lies in the shortage of the international spot aluminum supply. World Bureau of Metal Statistics (WBMS) released data on its website on the 22nd last Wednesday. From January to September this year, the world's primary aluminum output was 40.427 million tons, with a demand of 45.49 million tons and a market supply shortage of 1.463 million tons.

Summary: Aluminum prices may decline further

On the whole, with the relatively loose domestic aluminum supply and relatively weak demand due to seasonal and industrial reasons, the current limited production capacity in the northern heating season is not as expected as the aluminum price will continue to be pressured in the near term. Shanghai aluminum futures prices fell sharply in the short term, it is recommended to bearish operation