The Prospect Of Aluminum 2020
In 2019, Shanghai Aluminum's fluctuation range narrowed again throughout the year. After two waves of rise in April and August, the stock fell again, although the center of gravity has moved upward. At the end of 2018, the aluminum price fell to the bottom. At that time, the electrolytic aluminum production capacity gradually recovered after the price rebounded. Combined with macro stimulus measures and lower alumina prices, the electrolytic aluminum industry has revived. Since August, natural disasters and man-made disasters have occurred again, and the new production rate has been slower than expected throughout the year. From a cyclical point of view, the supply end of electrolytic aluminum has experienced a period from loose to tight in 2019. In the future, under the development of new production capacity, it will gradually move towards easing.
On the demand side, with the economic adjustment period under the respect of macro method, it was as weak as expected.The frequent trade cooperation between China and America ; the failure of "Golden September and Silver October"; aluminum exports are constrained everywhere; real estate industry sales fall and decline in new starts; and the long-term downturn of automotive industry, all of these are weakening the consumption capacity of the downstream consumer end of electrolytic aluminum. In the 2020, the demand side is still difficult to produce bright spots because it is subject to the general situation, but the author believes that it is the automobile industry that is expected to bring certain benefits to consumption. Aluminum for consumer products and UHV will become the new growth point next year.
Overall, the aluminum ingot inventory that has been in the destocking will also usher in a turning point from falling to rising in 2020. If there is no interference from external policy, the market torrent will roll forward in the direction of continuous surplus. At the bottom of the economic development, the price of raw materials is difficult to sustain, and it is bound to follow the general weakness. Whether aluminum can rise firstly among all non-ferrous varieties depends on the timing of the rise of demand. This process is expected to be a trend of suppression firstly,and then increase. In the first half of 2020, after the price of upstream alumina is no longer the support in cost , the issue of capacity release of electrolytic aluminum will determine the future direction of aluminum prices. It is expected that the aluminum price will show a wide range of fluctuations after the first suppression in the next year and the main range of fluctuation is between 13300-14200.
In addition, the aluminum option varieties may be listed next year. At that time, enterprises can choose aluminum options with higher safety factors and lower capital occupancy for risk hedging operations based on the judgment of the disk price. For example, you can buy Shanghai Aluminum call options or sell put options ahead of time. For enterprises with higher inventory, they can reduce the amount of inventory, purchase on demand, or consider selling call options to reduce the cost of holding positions.