Aluminum has stopped falling and there is limited room for price fluctuations

In terms of output, due to the aggravation of losses, some domestic electrolytic aluminum enterprises have expanded their production scale, which has an immediate effect
on the decline in output.
Data show that China's primary aluminum production in October was 2.
715 million tons, an increase of 6.
8% year-on-year, and a decrease of 70,000 tons
compared with September.
The cumulative output from January to October was 27.
714 million tons, a year-on-year increase of 4.
4%.

Entering October, production may rise or be suppressed
as the scale of production cuts expands.
As of the end of November, the cumulative domestic production reduction scale was nearly 2 million tons
.
In addition to the company's initiative to reduce production, although the heating season production limit is not as good as the same period last year, it is expected that about 500,000 tons of production capacity will still be affected
.

In terms of import and export, since the beginning of the year, aluminum exports have shown a strong momentum, on the one hand, the difference between internal and external prices has brought better export profits; On the other hand, the US tariff policy encourages suppliers to export
as much as possible before the tariff increases.
Customs data showed that exports of unwrought aluminum and aluminum products in October were 482,000 tons, down 25,000 tons from September and up 37.
7%
from last year.
From January to October, the cumulative export was 4.
734 million tons, a year-on-year increase of 18.
2%.

Among them, aluminum exports in the month were 440,000 tons, down 30,000 tons from September, still a year-on-year increase of 38.
8%; From January to October, the cumulative export of aluminum products was 4.
3 million tons, a year-on-year increase of 22.
2%.

At present, exports still have some profits, but in view of the repair of internal and external price differences, exports are likely to
gradually cool.

In terms of inventory, the phased decline in production, coupled with the basic maintenance of low consumption, has eased the pressure on inventory
.
Domestic aluminum ingot inventory has continued to decline since the second quarter, and the destocking cycle is much longer than the historical level
.
From the perspective of monthly supply and demand balance, the second half of the year is basically in a supply shortage situation, which may be more obvious in December, because the operating capacity fell to a low level and the production fell significantly
.
By February 2019, production will exceed consumption, and supply will shift from shortage to surplus, and inventories will climb again
.

To sum up, at the end of the year, due to the reduction of production and the slowdown of new production capacity, the actual output showed a phased decline, during which consumption was relatively stable, so the fundamentals improved briefly, which brought some support
to the futures aluminum.
However, due to the continuous decline in crude oil prices, it is still difficult for aluminum prices to rebound during the year, and it is expected that the main contract operating space is 13500-14000 yuan / ton
.
Around the Spring Festival, domestic consumption will show a seasonal weakening trend, the market will enter the accumulation stage, coupled with the decline in costs, aluminum prices will be significantly
pressured.
However, the price decline will inevitably trigger a further reduction in production of high-cost aluminum plants, and then support the price of aluminum, so the fluctuation space of aluminum prices is still limited, and it is expected that the main operating range of the main contract in the first quarter of next year is 13200-14000 yuan / ton
.