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Speculative arbitrage across London's aluminum market in Shanghai once again fell into a “quagmire†of losses. Under the influence of the new tax policy, the aluminum futures on the Shanghai Futures Exchange fell sharply for two consecutive days, dropping more than 700 yuan this week. International funds have taken the opportunity to pull up the price of Lun Aluminum. In this process, many domestic funds that cross-market anti-arbitrage in the aluminum market in the period have paid a heavy price.
According to a trader of an overseas futures company, at the end of September, the London aluminum price in the two markets during the period was 7.3 to 7.4, which was higher than the normal export price. Calculated at this price ratio, the Shanghai aluminum price was 18,800 yuan in September, and the overseas export cost was 2,500 dollars. At that time, the price of Alluminium was near 2,600 dollars. It bought aluminum at home and then sold it in London. Theoretically, the price per ton There will be no risk arbitrage nearly 100 US dollars. Therefore, many anti-arbitrage speculation funds in China have established a position of “doing more aluminum in Shanghai and aluminum in short†between the two cities. At the same time, the International Fund has increased its position on the London Metal Exchange (LME) aluminum futures since September. These cross-market anti-arbitrage funds from China have once again become the “prey†of international funds.
Starting from the end of September, driven by this anti-arbitrage fund, the Shanghai Aluminum aluminum December contract’s position has been increased from more than 20,000 hands to more than 50,000 hands, and the volume of transactions during this period also hit a record high. From 11,500 yuan to 20,000 yuan, almost doubled. At the same time, Lon Aluminium's current positions have begun to increase, from 520,000 hands to nearly 560,000 hands. As international funds continue to rise, Lon Aluminum also rose from 2,500 US dollars to 2,800 US dollars. This has deviated from the original intention of the initial introduction of domestic arbitrage funds. But at the time, these anti-arbitrage funds did not lose money, but the money they earned from the Shanghai aluminum market was transferred to the pockets of those "hunting" international funds.
In the domestic operation, these speculative panels prevailed in September and October. They used funds to participate in Shanghai Aluminum in a large scale, relying on the “oversupply of domestic aluminum ingot aluminum exports†and “lower stocks of Shanghai aluminum stocksâ€. The support pulled up the Shanghai aluminum price. The rise in aluminum prices has brought huge profits to the smelting enterprises. Under the temptation of profits, the production enterprises have started production at full capacity.
On Friday, the market changed drastically. The Ministry of Finance issued a notice to adjust the electrolytic aluminum tariff policy. Since November 1st, the export tariff of electrolytic aluminum will increase from 5% to 15%, which will cause domestic aluminum prices to begin to be under pressure. On the first two trading days of this week, aluminum prices have been in a pattern of “outside strength and weaknessâ€. The increase of the export tax rate of aluminum ingots by 10% means that the export cost of aluminum ingots is increased by 10%. According to the current calculation of $2800, the cost of aluminum ingots will increase by 2,500 yuan. In other words, Shanghai aluminum prices must be reduced by 2,500 yuan, or LME aluminum prices should be increased by 280 dollars to complete exports. This is exactly the opposite of the “long domestic and short London†position that these anti-arbitrage speculative panels presuppose, which makes the former risk-free. The arbitrage model also fails.
Judging from the situation in the past two days, after the release of last night's policy on Friday, these anti-arbitrage plates began to panicly retreat in the London market. At 19:00 on Friday, LME aluminum prices pushed up from the short stop loss of $2,770 to $2830. This week, a set of favorable trades and three contracts of Shanghai Aluminum from November to January next year significantly closed their long positions. The three contract positions reduced a total of about 13,000 contracts on the same day, and prices also fell sharply.
Yesterday, the Shanghai aluminum market continued the previous day, the main January contract fell by 700 yuan, once again fell sharply, once hit the daily limit of 19,530 yuan, and later closed at 19,680 yuan, down 780 the previous day Yuan; while the aluminum market continues to rise.