Inflation acclaim "aluminum" star

U.S. inflationary pressures aggravate the dilemma of the Fed’s monetary policy. Since the beginning of the year, the U.S. economic recovery has accelerated and economic data have become more brilliant. However, following the turmoil in the Middle East, the impact of Japan’s strong earthquake, and the repeated recurrence of the euro zone’s debt problems, the US’s fragile economic recovery slowed again. In the US, existing home sales fell 6.9% month-on-month, exceeding market expectations. In February, existing home sales fell by 9.6%, prices fell to the lowest level in nine years, and the number of durable goods orders also unexpectedly declined in February, hitting market confidence. The unemployment rate is 8.9% higher, and the economic recovery is still struggling. However, rising energy and food prices have caused consumers to expect higher living costs. With gasoline prices soaring, consumer expectations for inflation over the next five years jumped from 2.9% in the previous month to 3.2% in early March. In February, the consumer price index (CPI) rose by 0.5%, the fastest increase in more than a year and a half. The indicator of inflation expectations in the market has also risen. The spread between the five-year US Treasury bond and the five-year TIPS was 2.26% on March 24, which was close to the highest level in a year. The Federal Reserve (FED) has taken a dilemma in making decisions on monetary stimulus. But for a highly consumer-dependent economy, the Fed is unlikely to tighten its policy soon, even if consumers recently realize that inflation will start. China's tightening policy has not changed China's tightening policy has not changed. Although the People's Bank of China will reassess its tightening policy after the earthquake in Japan, even if the pace of tightening is suspended, it will only be a temporary phenomenon because inflation pressure remains high. February CPI rose by 4.9% year-on-year, and PPI rose by 7.2% year-on-year, the highest since May last year. The short-term loans of residents in the central bank's February credit data were almost zero. The short-term residents in February increased by only RMB 600 million, which is rare in the calendar year. From January to February, the total retail sales of consumer goods fell back to 15.8% year-on-year, and after deducting price increases, it was only 10.9%, the lowest since February 2008. The National Bureau of Statistics announced that the consumer confidence index in January also fell to 99.9, which was the seventh consecutive month of decline, and the data has been below the level of SARS and the early financial crisis in 2008. In April, China's inflation rate may be around 5.5%. The People's Bank of China announced on the 17th that the reserve requirement ratio was raised by 0.5% since the 21st. The possibility of rapid growth in China's demand in the second quarter is very small. In order to maintain stability, consumption growth is expected to continue to slow. Rising production costs Aluminum prices rise at the bottom Aluminum prices are already at the edge of the cost, and because energy costs account for 40% of the cost of electrolytic aluminum, recent increases in oil prices in the Middle East have combined with the negative impact of the Japanese nuclear radiation crisis, resulting in alternative energy sources. The price rose sharply and pulled up the production cost of primary aluminum. If energy prices remain high, it is expected that aluminum prices will continue to rise. In addition, the rise in mineral raw materials and labor costs caused further upward pressure on the cost of primary aluminum. Chinalco raised the alumina spot price to 3,000 yuan/t on March 3, up 3.4%. In addition, as more than 50% of China's alumina imports rely on imports, the recent appreciation of the Australian dollar will further boost China's electrolytic aluminum costs. In 2010, the average cost of domestic electrolytic aluminum smelting was 15,963 yuan. In 2011, the cost of electrolytic aluminum was calculated based on the latest prices of various raw materials. The domestic aluminum cost was approximately 16,250 yuan/ton. Aluminium stocks and prices are different both inside and outside China From August to December last year, global aluminum inventories fell due to China's energy-saving emission reduction and power-reduction policies. LME stocks fell to about 4.27 million tons at the end of last year, and the stocks of the Shanghai Stock Exchange dropped to about 440,000 tons. Since the Spring Festival this year, both domestic and foreign aluminum inventories have increased significantly, and China's primary aluminum inventories may increase further in March. Due to the increase in production, inventory has soared by 43% so far this year. It is estimated that China's aluminum stocks, including the aluminum stocks of the Shanghai Stock Exchange, are close to 2 million tons, the highest level since August last year, Guangdong Province is close to 500,000 tons, and LME stocks have increased to around 4.35 million tons. However, the relationship between aluminum inventory at home and abroad cannot be compared with the price, especially if the inventory actually reflects the change in supply and demand. Aluminum prices at home and abroad still maintain the pattern of external strength and weakness. LME3 monthly aluminum has hit record highs this year, while domestic aluminum prices have only risen passively. At present, the aluminum inventory does not fully reflect the changes in the market supply and demand relationship. More than 80% of ** warehouse receipts have made the aluminum aluminum stocks unable to circulate, and the increase or decrease in short-term stocks is more of a market participant's position adjustment behavior. Therefore, it cannot be regarded as an oversupply directly, and thus it has little impact on Alluminium's price. On the contrary, due to the tight physical supply in the spot market, the aluminum spot premium remained high and remained strong, staying above the US$125/t level. In contrast, the domestic aluminum market responds sensitively to changes in spot inventory. China's power curtailment policy comes to an end Global aluminum production rebounded According to the International Aluminum Association (IAI) data, global aluminum production in February was 1.949 million tons, a decrease of 186,000 tons from the previous month. Compared with the same period last year, it increased 133,000 tons. Daily production also increased in February from the 68900t in January to 69600t. In December of last year, Henan Province, China, will reduce the supply of electricity to the aluminum smelters by 20%, causing the operation of the province's highest aluminum output to suffer setbacks. However, the increase in power supply to refineries last month allowed the industry to restart idle capacity or start new capacity. China’s daily average aluminum output in February increased by more than 12% compared to the same period of last year. At present, China’s aluminum output has almost returned to the peak level reached in the middle of last year, and the market supply is expected to continue to increase. It is estimated that China's electrolytic aluminum production capacity will reach 24.602 million tons in 2011, an increase of 17.8% over 2010. At present, the restart of electrolytic aluminum production capacity is limited to areas such as Henan, and the production reduction of electrolytic aluminum production in most provinces in the country has not increased temporarily. The arrival of a new round of production restart and expansion after the holiday season will make the market supply surplus again. The production data of the China Nonferrous Metals Industry Association shows that the growth rate in February rose significantly from 14.88 million t/year in January to 16.99 million tons. /year. As the power supply to the smelter has returned to normal, the current aluminum price will attract production capacity. However, the central bank will strictly control the “two high” industries and overcapacity industries, to some extent, it has limited the potential for a large-scale restart of small electrolytic aluminum plants. It is expected that aluminum prices will continue to oscillate upward after the correction, and will climb to the stage this year. High sex. China's aluminum consumption basically held steady. China's passenger vehicle sales in February were affected by the Spring Festival holiday, which was a significant decrease from the previous quarter and a slight increase of 2.6% year-on-year, the lowest increase in 23 months. As the preferential policies for car purchases have been cancelled at the beginning of the year, and the hot spring sales have already passed, the growth momentum of China's passenger car sales will be weakened in the coming months. Despite this, an increase of 10.50% over the same period of the previous year from January to February is a normal level of growth. In the long run, the steady growth of the national economy is the basis of the auto industry. Stimulus policies are only emergency measures to deal with the financial crisis. The overall sales situation of the car this year is cautiously optimistic. The aluminum consumption demand in the real estate sector this year will also remain basically stable. In January of this year, the Chinese government issued new measures to regulate and control, adopted a third round of tightening measures such as increasing the down payment for second-home suites and rolling out “restricted purchases”. At present, there are more than 30 cities that have restricted purchases. The purchase restriction policy has reduced the transaction volume of the majority of China's property market, but the government plans to start construction of 10 million sets of affordable housing this year, a substantial increase of more than 70% from the previous year. In the next five years, the country plans to build 36 million new affordable housing units. It is about twice the size of the construction in the past 10 years. At the same time, in the “Twelfth Five-Year Plan” outline, it also explicitly proposed providing low-rent housing for low-income housing families in urban areas. For middle- and high-income families, a commercial housing system combining leasing and purchase will be implemented. Therefore, the increase in affordable housing construction will offset the aluminum gap in commercial housing. Prospects for the market outlook In summary, aluminum prices are relatively resilient and long-term trends are bullish. Of course, there is limited room for growth due to the constraints of excess capacity and inventory. The factors that currently dominate the rise in aluminum prices are the liquidity released by Japan and rising prices of energy and raw materials caused by global inflation, leading to higher aluminum prices. The fundamentals of market supply and demand have not changed much at present. The growth rate of real estate, automobiles and electricity may slow this year, but growth is still guaranteed; the demand for high-speed rail, high-end manufacturing and new economy may exceed expectations; the aluminum ETF to be introduced will absorb about 1 million tons of stocks, and whether aluminum It will be worth further attention to get out of the market similar to the copper market last year. Japan's reconstruction of the quake-hit areas is expected to significantly increase aluminum demand, and the arrival of traditional consumer peak seasons will also support physical market prices. In addition, the huge aluminum inventories locked in long-term transactions held by banks such as Deutsche and Goldman Sachs, or Glencore, are still potential risks for the aluminum market. These transactions depend on co-existence of the following conditions: low interest rates, incentives provided by warehouses, and recently delivered aluminum prices are significantly lower than long-term contracts. The rise in aluminum prices may have a squeezing effect on the international market, forcing aluminum to be released from the gambling trade. ** The profit of the transaction has dropped significantly and has forced traders to shorten their deadlines. If the aluminum price is pulled back to near or below 16,000 yuan/t in the short-term, it is more than a chance to open positions. In addition, we need to pay attention to when the reconstruction of Japan started, so as to determine the exact demand for the resumption of its imports of aluminum alloys from China. At present, it is expected that aluminum prices will oscillate upwards in the April-May purchase season.