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Rising aluminum prices are the main theme
The rise of aluminum prices is the main theme of Jinniu Futures Liu Huiyuan (021)-36 Due to the influence of macro-control, domestic aluminum prices basically oscillated between 15500 and 17500 yuan/ton after May 2004, and hit a record high with copper prices. A great contrast. At the end of December, before and after the announcement of the policy of canceling export tax rebates and increasing export tariffs, aluminum prices had a rapid rise in the participation of short-term speculative funds, but then quickly fell back under huge real selling pressure. 16000 yuan a narrow range of finishing, then this year, aluminum prices will go in which direction it? The author believes that after the baptism of the macro-control, the domestic electrolytic aluminum began to enter the standard development period. After a series of industry policies have been successively announced, Shanghai Aluminum will soon usher in a splendid spring. In 2005, the aluminum price was digesting the inventory pressure. Will enter the main Shenglang market. I. Abolition of Export Tax Rebates The imposition of export tariffs has a significant short-term effect on exports. Since 2005, exports of aluminum ingots will be cancelled by 8% tax rebates and imposed a 5% tariff, which increases exports of aluminum. The substantial increase in costs and export costs will greatly reduce the enthusiasm of domestic exports of aluminum ingots, and companies will tend to sell domestically. However, the reduction in exports will lead to higher international aluminum prices, which in turn will make exports more lucrative. As a result, exports will increase imports and reduce aluminum surplus. The monthly export situation in 2004 fully demonstrated this point. Since the export tax rebate rate fell from 15% to 8%, the export volume in the first few months of last year dropped sharply, but the subsequent export volume rose steadily. Therefore, it can be predicted that the implementation of this policy will cause some pressure on domestic aluminum prices in the short term, but its long-term effect is not obvious. Second, aluminum supply growth in 2005 will tend to stabilize As the world's largest aluminum production country, the rapid development of China's aluminum industry led to rapid growth in production capacity and production, playing a pivotal role in the global aluminum market. As electrolytic aluminum is a high-energy-consuming, high-pollution industry, it has become a key target of the country’s macroeconomic control. In 2004, the state eliminated most of the seriously polluted self-baked electrolyzers, strictly controlled new projects, increased the capital ratio of fixed-asset investment projects, prohibited producers with production below 100,000 tons from directly importing alumina, and cancelled export tax rebates. Tariffs and other measures for exporting aluminum ingots have curbed the blind expansion of domestic aluminum production capacity. In 2005, the shortage of electricity will continue and the domestic capacity utilization rate will be difficult to increase. It is estimated that domestic aluminum production in 2005 may reach about 7.3 million tons, an increase of only about 700,000 tons compared with about 6.6 million tons in 2004. In other countries, due to the relatively small increase in aluminum prices in 2004, new production capacity is not very active. Global aluminum production is estimated to reach 31 million tons, an increase of 4.7% year-on-year, down from 5.6% in 2004. Third, the demand will continue to maintain rapid growth This round of high economic growth is mainly driven by investment demand, of which the performance is more obvious is the real estate and automotive industries, which is also the main two major industries of aluminum consumption. The characteristics of these investments are large-scale projects and require a long investment cycle. At present, there are more than 70,000 projects under construction in China, and the scale under construction exceeds 16 trillion yuan, which is equivalent to three years of fixed asset investment. Therefore, the climax of the investment that began in 2003 is based on an average five-year construction period, at least until 2007. In each of these years, the annual growth rate of investment will not be less than 25%. Although the United States has entered a rate hike cycle, its industrial production and housing starts have remained at a high level, and the rapid development of real estate has not changed. The U.S. consumption of aluminum in 2004 increased by as much as 12%. Although the demand of other countries faces some variables, the strong demand of the two large aluminum demand countries in China and the United States will make aluminum consumption in 2005 will maintain a relatively rapid growth. Fourth, the depreciation of the dollar will become a continuous driving force for rising aluminum prices. The US deficit in the fiscal deficit and current account hit record highs. The U.S. personal saving accounted for only 0.2% of household disposable income, far below the historical average of 8-11%. Consumers who lack savings and living beyond income levels have caused the United States’ household debt burden to continue to increase, and the debt-repayment rate remains high. In order to solve the problem of the lack of domestic savings, the United States needs to import large amounts of surplus surplus countries through trade and current account deficits. The geopolitical risks, the security expenditures brought about by the shadow of terror, the social welfare burden under the ageing population, and the tax-extending policies for expansion next year are all great difficulties facing the Bush administration’s efforts to reduce the double deficit. The U.S. fiscal deficit will be substantially reduced next year. The possibility is small. Therefore, as a whole, the US dollar will continue to weaken next year, which will become one of the continuing drivers of the rise in aluminum prices. V. Production Cost Constitutes Strong Support to Aluminum Prices In domestic aluminum ingot costs, alumina and energy consumption are the main factors affecting the production cost of aluminum ingots, accounting for about 45% and 32% respectively. At present, the production cost of most electrolytic aluminum plants in China is above 16,500 yuan per ton, which makes the domestic aluminum price drop space is extremely limited. At the beginning of this year, LME integrated aluminum had plummeted, but Shanghai aluminum was still relatively strong, resulting in a rebound in domestic and foreign prices to 8.8. Nearby is also based on this reason. The coal-electricity linkage policy implemented by China this year will raise the price of electricity, and the state will ban direct import of alumina from manufacturers below 100,000 tons. The import of alumina is mainly carried out through China Aluminum Industry, with a strong monopoly. Therefore, the production cost of electrolytic aluminum is difficult to reduce in the short term, which constitutes a strong support for aluminum prices. In summary, although short-term aluminum inventory pressure will restrain aluminum prices from rising, good fundamentals and market conditions will determine this year's aluminum prices will gradually enter the rising channel.