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On the 31st of October, Shanghai Aluminum opened slightly lower and the volatility was lower. Industry analysts believe that domestic aluminum prices continue to digest policy weaknesses, and there are rumors in the industry that China Aluminum Corporation will once again lower alumina prices will cause some pressure on aluminum prices.
On Tuesday, October 31, the Shanghai Futures Exchange (SHE) aluminum main 701 contract opened at 20,110 yuan and closed at 19,680 yuan, down 670 yuan; the spot 611 contract closed at 20,000 yuan, down by 600 yuan.
Bette Futures analyst Gao Ye believes that Shanghai Aluminum’s short energy has been released and its price is close to a reasonable level.
According to industry rumors, Chinalco decided to reduce the spot alumina price from RMB 2950/ton to RMB 2500/ton from the midnight of November 1, 2006, a decrease of 15.25%. This is Chinalco's fourth reduction of alumina prices since August. This formed a 31-day long aluminum bullion. The bears reached an upsurge in the afternoon selling, and the price once touched the limit price of 19,530. As London Aluminum is still in a strong market rebound, the next domestic drop is in the nature of price fixing, and it also has some panic. According to the conversion of London and domestic prices, London's 2800 level is equivalent to the domestic 701 contract level of 19600. Therefore, the tail market price is sorted in this range, and long and short positions also reduce most of the positions of Masukura. The 701 contract ended at 19680.
Shanghai spot aluminum fell 490 yuan to 20,455 yuan / ton, Guangdong Nanhai spot fell 460 yuan, the trading range is located at 20360 to 20480 yuan / ton.
China Customs announced that China’s net exports of primary aluminum reached 66,500 tons in September, setting a new high for net exports since April 2006. This is also the second highest point of China’s net exports of primary aluminum in 2006. In March 2006, China’s net exports of 70,200 tons of primary aluminum. In September, China exported 84,200 tons of primary aluminum, imported aluminum 17,700 tons, and net exports of 66,500 tons. From January to September, China accumulatively exported 674,000 tons of primary aluminum. The main exporters were South Korea (403,000 tons) and Japan (105,000 tons); the total import of primary aluminum was 248,000 tons, and the main importer was South Korea (106,000 tons).
International Aluminum Association announced that at the end of September 2006, all types of aluminum stocks held by Western producers (excluding finished finished products) fell to 2.898 million tons, which was revised to 2.927 million tons in August, and the end of September 2005 was 323.3 million tons. Un-forged aluminum stocks fell to 1.6 million tons in September, and were 1.614 million tons and 1.777 million tons in August and September 2005, respectively.
The London Metal Exchange (LME) zinc recorded a record high on the 30th, benefiting from the reduction in inventories, while most of the other base metals fell. The United States announced on the 27th that its third-quarter gross domestic product (GDP) year-on-year growth rate was 1.6%. For 2003, it has been lower since the previous quarter, which has hit market sentiment. The sharp drop in crude oil that day dragged down other base metals. Three-month aluminum closed at 2,808 U.S. dollars, which was 7 U.S. dollars lower than that at the end of the 27th. It maintained a relatively strong trend, with 1,47086 lots traded on the trading day, adding 1574 hand positions and reducing inventory by 1,225 tons.
Japanese trader Marubeni predicts that the global aluminum market will shift from supply shortages to oversupply in 2007, and the degree of excess will increase in 2008 as aluminum production grows faster than demand. Before the policy meeting between the Bank of Japan and the European Central Bank (ECB) later this week, traders mostly retreated. The October non-farm payrolls report will be released, and the market will be more aware of the U.S. economy. Prior to this, the Bank of Japan and the ECB will hold policy meetings respectively.
Domestic Shanghai aluminum reflected strong changes on the tax system on the 30th and 31st. Aluminum prices once fell to a suspension on two consecutive trading days. However, since London Aluminum still has upside energy in the short term, it is impossible for China to go out of the slump. It is expected that Shanghai Aluminum's acquisition of this week will be expected to stabilize at 19400 to 19600.