Jinniu Futures Yang Haili The substantial increase in aluminum prices of Lunun did not effectively boost Shanghai aluminum futures prices. The pressure on the domestic production capacity caused a repression of aluminum prices. Recently, Shanghai Aluminum has maintained a narrow range of fluctuations in various periods, and the total volume of transactions has shrunk to less than 9,000 contracts. Shanghai aluminum main contract on Monday AL0601 opened for 17,290 yuan, and quickly fell after rising 71,310 yuan, closing at 17,240 yuan, a slight increase of 10 yuan. Judging from the newly published economic indicators, the OECD Composite Leading Indicator rose further in September, and the six-month average rate of change has increased for five consecutive months. The continuous rise of OECD composite leading indicators is an encouraging signal for industrial growth and metals such as steel and electrolytic aluminum. Despite signs of slowdown in industrial production in developed countries, China’s annual growth rate has continued to exceed 16%, and China’s demand remains the main driver of commodity prices. In terms of information, data released by the Aluminum Association of America showed that the output of primary aluminum in the United States fell by 2.3% to 2.44 million tons from 2.499 million tons in October 2004 at an annual rate; the annual rate of output from January to October totaled from the same period of last year. 2.529 million tons fell 1.4% to 2.484 million tons. Recently, LME stocks remained below 500,000 tons, and the downward trend was maintained. At the same time, spot prices had a 10-year premium to March aluminum and the aluminium futures price is expected to strengthen further in the short term. In the domestic market, production pressure is still heavy. It is expected that domestic electrolytic aluminum production will be between 7.2 million and 7.7 million tons in 2005, and the number of imported alumina will continue to increase. It is expected that domestic monthly output of electrolytic aluminum will remain at over 600,000 tons in the fourth quarter. On the other hand, the restrictions on production costs have given Shanghai Aluminum's price support some support. The domestic price of electricity was raised twice in a row, from the previous 0.26-0.32 yuan/degree to 0.30-0.36 yuan/degree, the domestic alumina price has risen sharply to 4660 yuan/ton, and the prices of carbon blocks and fluoride salts have also changed. With the increase in the degree, the cost factor is firmly supporting the domestic aluminum prices. From the late trend, the trend of alumina prices will dominate the direction of aluminum prices, the current Shanghai aluminum price dilemma, investors should wait and see.
