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How is it possible to win the cyclical "aluminum" war on the supply side

as the world's largest aluminum producer, China has actively responded to the central supply side reform call this year and has initiated the policy of shutting down illegal production capacity. Hongqiao confirmed that it had shut down 2.68 million tons of illegal production capacity, equivalent to 4.5% of last year's global output. Weiqiao and Xinfa shut down 3.21 million tons of illegal production capacity. This capacity reduction measure must have a significant impact on the supply side. Since August, the aluminum main contract has increased by 13%

then, where will the aluminum price go in the later stage under the environment of de capacity on the supply side? Focusing on the current hot topics in the aluminum industry, qb/t 1048 (2) 004 "cardboard and carton compression testing machine", gb/t 15234 (1) 994 "plastic flat pallet", gb/t 4996 (1) 996 "general flat pallet test method for intermodal transport", gb/t 27915 (2) 011 "combined plastic pallet", gb/t 4996 (1) 985 "wooden flat pallet test method" and other standard requirements, on the evening of August 30, aluminum analysts, industry and investors gathered at university road, Participate in the second seminar together

participants: Liu Xiaolei, senior analyst of Shanghai Nonferrous aluminum industry, Shen Feng, general manager of Shanghai Business Department of Guolian futures, Shen Weizheng, chairman of the second Cultural Communication Co., Ltd., Mr. Wang Xiaogang, partner of Dingfeng fund, Yan Fenglin, partner of nuclear capital, Liu Wensheng, partner of nuclear capital management, Zhang Xuefeng, famous copper futures analyst, sun Hongjun, nonferrous metal procurement expert, etc

the following is the speech content of Liu Xiaolei, a senior analyst of Shanghai Nonferrous aluminum industry:

as a third party of research institutions, here I will share some views and views on the current situation of electrolytic aluminum industry with you. Today, the theme of my speech is the current situation and outlook of supply side reform of aluminum industry in. There are four parts in my speech:

I Under the background of supply side reform, the reduction of production did not reverse the surplus pattern in 2017

we continue to look at the social inventory of electrolytic aluminum in China. Considering that aluminum is a popular industry, I choose Shanghai, Wuxi, Nanhai, Gongyi, Tianjin, Chongqing, and Hangzhou. There are seven local inventories, including SHFE warehouse receipts, which represent the supply-demand balance of consumer places. In the past few years, the inventory situation actually reflects the problem of excess, which is equivalent to a recent shortage process. Of course, supply and demand are finally reflected in the inventory, which is why we continuously track this data and cover all consumer electrolytic aluminum warehouses in the country

this inventory is a list containing all deliveries made in the previous period. The inventory data is passed twice a week. On Monday and Thursday, this Monday has reached the level of 1.55 million tons. This valuation is also a judgment of the future over the past 11 years. This inventory will continue to increase in the future, because now when we discuss the supply side reform, we actually pay too much attention to the reduction of the supply side

this year is special. From this year to June, the inventory has not decreased significantly, but has remained in a relatively stable range of about 1.2 million tons. There is no obvious destocking. After entering July, it is a consumption off-season. August and September is a traditional consumption off-season. It is obvious that this year has a feature. Under the current background of supply side reform, However, there is a seasonal increase after July. There is a certain amount of inventory. From 1.2 million tons at the end of June to the end of August, it is about 300000 tons more than before, so the inventory growth is also a relatively obvious process

second, the difficulty of expanding the discount in 2017 is directly related to the control of shipments by traders.

from the perspective of fundamentals, many people believe that consumption is still weak and supply is decreasing, but the rate of reduction is slower than the rate of consumption reduction. Looking back on 2016, the domestic inventory was only 200000 to 300000 tons at that time, plus there was an obstacle process in Xinjiang affected by transportation after September last year, About 450000 tons were overstocked in Xinjiang. At that time, there was a shortage of aluminum ingots in the market

after 2017, with the increase of inventory again, the deep-water domestic spot inventory has become a discount. Today, we will post a discount of 220 yuan for the current month, which is the highest level in recent three months, close to the point when the inventory accumulated in March, indicating that it is difficult to sell in trade now. Although the absolute price is very high, the aluminum price can be up to 12000, or 16000, but it is very difficult to let it sell, It can only be put there as a discount, so why is it that there is no transaction and consumption in the market

it's very simple, because some traders are doing arbitrage transactions and risk-free arbitrage. If the aluminum plant has 1.5 million tons of inventory, it's not likely to worry about this problem, because 80% of the inventory is transferred to traders. These traders are sensitive to control the market, only do price spread arbitrage, and have no absolute concept of absolute value, as long as the discount of spot to the current month is expanded to more than twice, I can do risk-free arbitrage. If consumption is not good, the discount will inevitably be affected. Our general view is that the production reduction of the supply side reform is separated from that of the heating season. A part of the production reduction of the supply side reform may be reduced again after November 15 of the heating season, which we don't think will be superimposed

at present, according to our statistics, including the enterprises involved in the supply side reform, including Xinjiang hope, Jiarun, Weiqiao and Xinfa, the hope is about 650000, and their goal is to reduce it to 200000 tons, which should be reduced by the beginning of next month. Wei Qiaoguan said that all the 2.68 million tons are reduced, and Xinfa is 530000 tons, According to these quotations, my view is that there is not so much less in the 2.68 million tons of Weiqiao, that is, only 2million tons. The maximum output reduction in Xinjiang is 900000 tons, plus 450000 tons of Xinfa and 2million tons of Weiqiao, which is 3.35 million tons

of course, there is also an increase in production. I listed here that the production in the second half of 2017 was 2.41 million tons, including Zhongwang, Laibin Yinhai, Meixin, Hualei, Qiya and Inner Mongolia Chuangyuan. These enterprises have obtained the indicators in the aluminum investment industry for a long time, so there is no need to worry about this. The progress is a process from the second half of this year to next year. Of course, the 2.41 million tons I listed here are discounted for each

we believe that the market supply, especially in the electrolytic aluminum industry, according to the spot price, the price of aluminum oxide accounts for 40% of the cost of electrolytic aluminum. Normally, we understand that since the production of electrolytic aluminum has been reduced, aluminum oxide should be increased first, and the price should fall first. Then we will see the reduction of aluminum oxide production in the heating season. However, due to the influence of the ore structure, aluminum oxide plants such as Yulin, Shanxi, have a reduction of about 2million tons of production capacity, There has been a shutdown, and the normal price of alumina is within a range of about 17% of the price of electrolytic aluminum

what I have listed here is an average cost of electrolytic aluminum in the past. It is a cost analysis of 75 enterprises running electrolytic aluminum. At present, in September of Q3 2017, I put the price of aluminum oxide at 3000 yuan. According to statistics, the average cost of electrolytic aluminum across the country is close to 13800, and the cash cost is 12800. At present, the average spot cost of aluminum price in China will be higher according to this cost level

the year-on-year growth rate of semi-finished aluminum in the first half of 2017 was about 7%, and the export space in the second half of 2017 continued to remain strong. Part of the factor here is the export risk, which mainly comes from the weakening of overseas consumption, and it is difficult for the short-term market to show signs of significant weakness. In terms of the analysis of the balance between supply and demand of primary aluminum, we have made statistics. In 2016, the actual consumption growth rate of electrolytic aluminum in China was 8.93%, and in 2017, the actual consumption growth rate of electrolytic aluminum in China was 7.81%. In 2016, the growth rate of China's electrolytic aluminum production was 3.99%, and in 2017, the growth rate of China's electrolytic aluminum production was 13.1%

IV. in 2017, the supply still tends to be surplus. In the second half of 2018, it may turn to balance.

through the above analysis, finally, we predict that industrial aluminum is still surplus. In the Q4 domestic electrolytic aluminum phase in 2017, the main operation of aluminum is at yuan/ton, and the core operation is at yuan/ton. Probably in such a range, the operating range of domestic spot aluminum ingot price is about yuan/ton

liujunsen: the aluminum industry is difficult to start and stop production. However, under the pressure of environmental protection, Henan, Shandong and other places have more production stoppages, which has a great impact on the aluminum industry. The production stoppage also led to the rise of aluminum price. The aluminum price in Henan rose from 14000 to 160 when it was close to zero (for example, the valley value of unidirectional fatigue test was close to zero). October is a turning point. If the state removes production capacity from Weiqiao and strengthens environmental protection, aluminum prices will show an upward trend

Liu Wensheng: as for the national policies, Premier Li Keqiang organized the aluminum regular meeting and proposed that the aluminum industry needs to reduce production, but after a period of time, the capacity is still excess. In this case, is there another way to regulate capacity

xiaoshenghua: I think in a short time, the capacity of electrolytic aluminum is actually unlimited expansion, but at present, the capacity of this pattern can be unlimited expansion, and there will be no great reversal of the pattern, which gives investors confidence

Liu Xiaolei: there is another risk point: although it is very bad by September, the consumption point will still recover. My inventory will be de inventoried at the end of September and November. Although the space is not large, it is not a continuous process. The policy is not to reduce production for the purpose of reducing production. The important thing is that legally, there are no environmental protection procedures, no land approval, and no industrial and commercial approval when building the plant. This kind of natural need to stop production, in order to control the new production capacity. Shutdown involves employee resettlement and bad debts of banks. Policies should solve this problem and optimize the industrial structure, which is a process of transformation

Xu Kai: from a technical point of view, aluminum shows an upward trend. I expect the short-term target to be 18000, which is probably the same price for physical enterprises. From a macro perspective, the core of capacity reduction is to eliminate unqualified capacity through environmental protection. Large countries put the experimental board and the pre stripped self-adhesive label on the upper and lower or left and right chucks of the test intelligent electronic tensile test or electronic stripping test machine respectively. Chinese enterprises shrink strategically and stretch industrially. The result is that the investment enterprises benefit. The global economic recovery is relatively slow, and improving corporate profits can solve the problem of balance sheet. Aluminum involves daily necessities, and the production reduction will not be like that of coal and steel

Nguyen Gangming: I mainly do black. From the perspective of fundamentals and market response, it is still a little separated. From the perspective of market response, it is relatively optimistic. The biggest uncertainty is in which direction the national supply side reform is going? What is the cost of electrolytic aluminum industry? How strong is the national supply side reform

Liu Xiaolei: the production cost of new capacity is relatively high, and the shutdown can be controlled. Two tanks or four tanks can be stopped in a day. There are great differences in policy interpretation. Generally speaking, it is relatively conservative, so the funds of traditional industries are still on the sidelines

Yan Fenglin: I am optimistic about the general direction. The national industry needs to be upgraded, and the electrolytic aluminum industry is not in line with industrial upgrading. De capacity and

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