When the Spring Festival enters the countdown state, the number of orders that downstream processing enterprises can receive is becoming less and less. In the past two weeks, downstream processing enterprises will be on vacation, and consumption is about to enter the seasonal missing stage. There will still be more than two months of low consumption in the traditional peak season in March. If there is no stimulus or the industry will reduce production, the aluminum price will continue to drop 13,000 yuan / ton to seek support.
After the New Year's holiday, Shanghai Aluminum's main force opened lower and went low, and the 13500 yuan/ton mark quietly fell. China's lower-than-expected manufacturing PMI data and New Year's Day stocks and raw material prices fell, putting pressure on aluminum prices. LME will release the delivery of aluminum ingots to RUSAL after the lifting of the sanctions against RUSAL in the United States, which will have an impact on LME aluminum prices.
Global manufacturing PMI weakness Macro environment pessimism
China's official manufacturing PMI in December was 49.4%, expected 50%, the former value of 50%. The manufacturing PMI fell below the glory line in December, the first time since July 2016. The sub-indices show that manufacturing companies have maintained growth but growth has slowed. The business climate is not expected to be high, suppressing new orders and engineering. Suppliers are accelerating delivery and inventory is accelerating.
Affected by trade friction, Asian multi-country manufacturing PMI fell below 50 watersheds. In developed countries, the US manufacturing PMI fell to the lowest level in 15 months, and the manufacturing PMI in the euro zone hit a three-year low. Although the Italian deficit budget has lifted the risk of gunpowder barrels, the fact that economic growth is weak is difficult to reverse. The external macro of commodities is pessimistic and will eventually be transmitted to consumption. Prior to this, it will increase investor risk aversion and suppress metal prices.
Joint production cuts, no follow-up supply has not been significantly reduced
It is reported that at the end of the year, the backbone of the aluminum industry held a meeting, and the advisory body announced that the backbone enterprises have made 800,000 tons of production reduction based on the current production reduction. s plan. Only one week after the meeting, Guodian Investment Ningxia Energy Company reduced production by 50,000 tons. Shaanxi Hengkang Aluminum Industry plans to reduce production by 120,000 tons. At present, it has reduced 60,000 tons. Other than that, no other production reductions have been followed. Although the production has been reduced by more than 3.2 million tons since 2018, the resumption of production and new production after the release of heating production in March have greatly reduced the production reduction effect. At present, the production capacity is only over 500,000 tons lower than the high point of 37.52 million tons in 2018, and the price reversed at the end of 2008 and the end of 2015.The scale of production cuts is far from the same.
Recently, as the price of alumina fell below the 3,000 yuan/ton mark, the purchase price of anode carbon block was lowered in 2019, which reduced the cash flow cost of electrolytic aluminum production and slowed down the high cost production. There is no significant decline in production capacity, and the monthly output of electrolytic aluminum has remained relatively high, which is one of the most critical factors for suppressing aluminum prices.
Downstream holiday is a seasonal loss of consumption
From the interview situation, the order processing situation of the downstream processing industry in December 2018 is basically the same as that in November, but it does not show the characteristics of the previous peak season, but only Air-conditioning companies in some regions have seasonally placed orders for aluminum strips, but production delivery is basically completed before the Spring Festival. As the Spring Festival enters the countdown state, the number of orders that downstream processing enterprises can receive is becoming less and less. Within two weeks, downstream processing enterprises are on holiday, and consumption is about to enter the seasonal missing stage. For the new annual orders, the terminal wait-and-see mood is strong, and the processing of long-term orders is not ideal.
Supply continues and consumption is reduced or even absent, which is reflected in the increase in social stocks. Last Thursday, aluminum social inventories increased by 0.6 million tons, and after the New Year's Day, stocks increased by 34,000 tons, changing the long-standing de-trading trajectory. Due to the abundant stock, in the process of sharply falling futures prices, the spot discount is around 40 yuan / ton, and the willingness to fall is obvious. Regarding the post-holiday electrolytic aluminum market, we believe that there will be a period of unclear policy in the two sessions of the Spring Festival on March 5, and the downstream start-up and purchase intention will be insufficient. The lack of consumption will increase the accumulated time and increase the number of accumulated libraries. . Combined with the analysis of the accumulated stocks of the Spring Festival in 2012-2018, the reduction in production is concentrated in the fourth quarter of 2018. It is estimated that 400,000-500,000 tons of electrolytic aluminum will be accumulated after the Spring Festival in 2019.
Due to weaker demand, the super-expected weak PMI data shocked, and aluminum prices fell rapidly. From the traditional peak season in March, it is still more than two months of low consumption. If there is no stimulus policy or the industry cuts production on a larger scale, aluminum prices will continue to drop to 13,000 yuan / ton to seek support.
(Author: CITIC Futures)