Aluminum overcapacity suppresses prices favoring the window and door industry

On July 20, the top leaders of the central government reiterated that the continued implementation of aggressive fiscal policies and moderately loose monetary policies in the second half of the year not only responded to rumors that the stimulus policies were about to exit, but also eased the market's concerns about further tightening monetary policy. Afterwards, the Central Bank released the "China's macroeconomic situation analysis in the second quarter of 2010" report pointed out that in the future, China's economic slowdown and stabilization will be more likely, but it is unlikely that there will be a "double bottom". Obviously, this view of the central bank helps maintain market confidence. These factors created a bullish atmosphere for the domestic market, and the overall rise in the stock market and other surrounding species led Shanghai Aluminum to follow passively.

What are the 100 billion funds that are flowing? The latest daily hot money secret! Today's super-buy! Who will be the next hot section? Although benefit from the stabilization of the financial environment and the uptrend, the supply and demand fundamentals that determine the long-term trend of aluminum prices have not changed significantly, and domestic problems are still very serious.

Since the beginning of this year, domestic electrolytic aluminum production has remained at a high level. Accumulated production in the first half of the year totaled 8.19 million tons, an increase of 45.6% over the same period of the previous year. Although in late June was subject to falling aluminum prices, rising costs, and pressure from energy saving and emission reduction, there was an increase in market reports on production cuts, but the scale of real production cuts was very limited. At present, the actual reduction in production is estimated to not exceed 300,000 tons, which is equivalent to a huge capacity of more than 20 million tons in the year. With the recent rise in the domestic aluminum spot price and the price adjustment of alumina, electrolytic aluminum companies are even less driven by production cuts, and even companies that had previously stopped production have the potential to resume production. At the same time, relevant statistics show that new production capacity will exceed 4 million tons this year. Therefore, as long as aluminum prices are not far below the cost line, the market is unlikely to have a larger scale of production cuts. In the future, aluminum production will continue to operate at a relatively high level, and over-capacity pressures cannot be effectively mitigated.

In terms of downstream consumption, real estate investment still maintained relatively high growth. The data showed that the amount of development investment in the first half of the year increased by 38.2% year-on-year, only a cumulative decrease of 0.1 percentage points from the previous five months, and the decline in investment growth was not significant. Although 28 cities across the country have been approved to build affordable housing, the loan amount is about 49.3 billion yuan, but this will not affect the overall trend of the real estate industry. The Chinese government's regulation of real estate policies will not relax in the short term. Later, with the gradual emergence of policy effects, the slowdown in real estate investment will reduce the demand for aluminum.

In the automotive industry, after the Chinese auto industry continued to expand, the production and sales of automobiles began to decline in May for three consecutive months. According to data released by China National Automotive Research Institute, from January to July this year, the output of automobiles was 9.103 million, an increase of 39.42% over the same period of the previous year, and the number of automobiles sold during the same period was 8,241,400, an increase of 28.58% over the same period of last year. However, from the monthly data, domestic automobile production and sales in July were 1.238 million and 1.0562 million, respectively, a decrease of 4.34% and 6.7% respectively from the previous quarter. The month-by-month growth momentum of the domestic auto inventory cycle continued in July, increasing from 55 days in June to 58 days. Generally, the stocks from 45 days to 60 days are reasonable stocks. The stock volume is close to the upper limit, and the overall domestic sales of cars are not optimistic. . The drop in car demand will reduce aluminum consumption.

The future increase in supply and flat demand will exacerbate the excess pressure in the aluminum market, thus limiting the sharp rise in aluminum prices. However, in the short to medium term, the influence of policies, funds, and technical factors on the market is more direct. The sharp rise in commodity prices in July made the inflation pressure significantly increase. The market is generally expected that the July CPI will hit a record high in the year.

In addition, the slowdown in economic growth still remains. China’s PMI fell for the third consecutive month in July and hit the lowest level in 17 months. Under this background, the policy will remain stable in the second half of the year, and it is unlikely that further tightening policies will be introduced. This will help maintain the stability of the capital and will play a positive role in the aluminum market. Technically, the aluminum market has become stronger, but due to resistance, there is support, and the market may enter into an oscillating pattern.

It can thus be seen that the stabilization of the financial environment has made the market sentiment somewhat up. Policies and funds are still supporting the aluminum market. Constrained by supply and demand pressure, aluminum prices in the market will not continue to rise sharply. It is expected that the Shanghai aluminum main contract will oscillate between 15200 and 16200 in the short to medium term.

For the door and window industry, the price trend of aluminum prices will directly affect the cost of aluminum alloy doors and windows and other related products. The trend of aluminum prices tends to be flat and undoubtedly good news for the door and window industry.