Analysis of aluminum price trend in Yangtze River spot market (12.18-12.22)

Macro aspects: The weaker dollar index this week has been positive for the base metals market
.
Earlier, under the two clouds of the passing of Trump's tax reform and the risk of the US government shutting down, the dollar index was significantly under pressure
.
Although both events were successfully survived in the end, the dollar index did not show significant signs of rebound, and the dollar did not perform as well as the
rate hike.
The fundamentals of the aluminum market itself have also ushered in some good news
.
According to IAI data, China's aluminum production in November fell month-on-month, which formed a certain encouragement to the market, coupled with the continuous decline in LME aluminum inventory, the market has high expectations
at the end of the year.

Market: The trading performance of the current aluminum market this week is generally ideal
.
Aluminum prices are low, downstream has also increased procurement, for the end of the year and 2018 to prepare, the market generally has a consensus that aluminum prices around 14,000 yuan will be relatively stable, so in this line have increased procurement, holders from the previous active shipments to begin to control the rhythm of shipments, because the transaction momentum is better, generally turned into price shipments
。 Traders at the end of the year to sell for cash inventory is strong, traders and downstream are not only limited by funds, but also year-end settlement, rebound aluminum prices have made it difficult for the overall consumption in East China to improve, so the spot discount has expanded from around 220 yuan / ton at the beginning of the week all the way to 330 yuan / ton, the overall trading volume is not good
.

In terms of inventory: the trend of London aluminum inventory this week generally maintained a downward trend, the latest inventory reported 1104950 metric tons, and a total of 1,000 metric tons of inventory was reduced this week, a decrease of about 0.
09%; The total aluminum stock of the Shanghai Futures Exchange this week was 741324 tons, an increase of 4,935 tons, or about 0.
67%,
from last week.
Recently, the decline in aluminum ingot stocks in South China is relatively obvious, and it is currently at a level
of about 330,000 tons.
But the main reason is the problem of
downstream shipping preferences.
At present, the downstream bias is towards shipping to East China, because the price difference between the two places is not obvious, and the freight performance to East China is obviously cheaper, coupled with the downstream bargain hunting and purchasing positive, so the performance decline is obvious
.
However, in the future, as the inventory in South China declines, more sources will inevitably come to replenish, and the rate of inventory decline may slow down
in the future.

Aftermarket: Expectations of tighter supply have driven spot aluminum prices higher this year, and the recent decline in production has also provided support for aluminum prices, which have remained strong this
week.
The last trading week of 2017 came, coinciding with the Christmas market closed, in the lack of guidance of the external market, the domestic metal trend is not clear, in addition, most companies have entered the year-end settlement state, shipment transaction will be more difficult, the year-end capital factors will also limit the activity of the aluminum plate, so it is expected that the aluminum price will fluctuate in
the short term.