Sino-U.S. trade negotiations have no fruit |
| Author : Victor Date : 5/8/2018 7:15:26 AM |
1) This week, the U.S. representative visited China to conduct trade negotiations. However, judging from the contents of the negotiations and media reports, the differences and obstacles in the negotiations between the two sides are relatively large. The relatively tough posture of the United States and the Chinese response to compromise without compromise means that the follow-up trade friction is still likely to escalate, which will be detrimental to the overall macro environment. If the trade war escalates, as the aluminum downstream aluminum exports and end products still have the possibility of anti-dumping in the United States, the short-term ratio may still be adjusted back.
2) Overseas, although Rusal's sanctions have eased, there has been no resolution. RUSAL expects its primary aluminum exports to fall by 70% in April from the previous month. Short-term impact on overseas shortages will still have the effect of increasing aluminum prices. The reduction in production of Hydro alumina can hardly be resumed in the short term, and overseas alumina prices remain high. The overall aluminum price remains high.
3) The domestic fundamentals are still under pressure on aluminum prices. On the one hand, it is reflected in the fact that social inventory is not obvious. After the end of the heating season, electrolytic aluminum production capacity began to rebound. At present, the national operating capacity is back to 37.167 million tons, and the aluminum price is still rising rapidly. It will stimulate new investment and compliance production; on the other hand, affected by the trade war, downstream aluminum exports and end product exports are still adversely affected, and domestic real estate regulation is generally controlled by domestic demand. The overall supply and demand still does not support the surge in aluminum prices.
4) But the cost side has better support for aluminum prices. In the presence of alumina inside and outside the price difference, domestic alumina has a relatively large amount of exports, which in turn supports domestic alumina prices. Currently, the price of alumina is around 3000-3200 yuan/ton. It is understood that the current alumina export volume has reached 300,000 tons. On the other hand, domestic alumina plants have low inventory of alumina, which will be followed by passive purchases to support alumina prices. At the same time, the impact of the self-provided electricity reform policy on the cost of electrolytic aluminum will gradually appear, which will increase the low-end cost of the domestic electrolytic aluminum cost curve, which in turn will support the aluminum price.
6) In summary, it is expected that aluminum prices will continue to be dominated by fluctuations in the next week, and Shanghai Aluminum’s main operating range will be 14300-15,000 yuan/ton. Aluminium prices are 2200-2350 USD/ton. |