Southwest Weekly: Aluminum

Last week, the domestic market maintained the trend of interval oscillations as scheduled, but LME aluminum was in an abnormal state and the fatigue gradually faded; Shanghai Aluminum entered the cost zone and there was little room for future market declines. Although other metals such as copper in the London Metals market rose slightly under the influence of the weakening US dollar, the aluminum market gradually fell out of the rhythm of other metals. The main factor was the gradual increase in supply pressure and the lifting of export tax rebates for China next year. Significant increase in export doubts. The domestic market is bleak because of the increase in production capacity and the impact of macroeconomic control. However, the current period price is already lower than the average cost of the company, and there is little room for the market to fall. Radical practice can also be established around 15500 more than a single, the target should be around. There are not many important data released on the international market, but the speech of the US politicians seems to indicate that the U.S. government is accepting the continued depreciation of the U.S. dollar. According to reports, the US Federal Reserve Chairman (FED) Chairman Greenspan spoke earlier, saying that the current US current account deficit is difficult to maintain, and the demand for US assets by foreign investors may weaken, which will continue to weaken the US dollar. Analysts said that Ge Lao’s speech meant that the US dollar needed to weaken, and that US policy makers would not prevent the US dollar from falling. Credit Suisse, according to Bonaka, former head of Boston’s foreign exchange research in New York, said, “This is an important speech. It is unusual.” He said, “I think Greenspan calls for the US dollar to go down in the short term. I think this is a watershed.” In any case, it is difficult to determine how much the dollar will fall. On an international basis, Alcoa's 400,000-ton aluminum smelter will probably resume production soon. According to Reuters, Alcoa, the former largest aluminum producer in the world, said that the company's management and its 400,000-ton aluminum smelter strike union, based in Becancour, Quebec, Canada, will resume negotiations on Monday, if necessary. Prepare to continue negotiations on Tuesday. Alcoa spokesperson Pierre Despres said the two sides resumed salary negotiations with the help of government mediators. He added that both sides agreed not to disclose the details of the negotiations to the public. This negotiation aims to end the strike that has lasted for more than four months. On July 7th this year, about 800 Becancour smelter workers belonging to the North American Iron and Steel Workers’ Federation failed to reach an agreement with the management on salary, employment protection, outsourcing and pensions. The strike has now begun with one third of the smelter. The production capacity runs. The country’s macro-control policies for the aluminum industry seem to be increasingly stringent and may even extend to aluminum products. According to reports, an aluminum processor said on Monday that the Chinese government may cut the export tax rebate rate for aluminum building materials from 13% to 11% in order to get rid of the electricity shortage. Industry. Since the market had already digested the factors of export tax rebates, the news on the proportion of export tax rebates for processing aluminum materials that may reduce the use of building materials, etc., was relatively dull. The international market has already felt the short-term supply pressure from China. Since last week, the international spot market has changed from premium to premium for the first time, indicating that the tight supply situation has eased. Moreover, in the short term, China seems to continue to increase its supply. According to reports, the Ministry of Commerce is still stepping up processing export trade applications submitted before the cancellation of export tax rebates. They said that many smelters that had previously permitted direct import of alumina had submitted their applications before revoking export tax rebates. The increase in supply has pushed down the spot aluminum premiums for November-December delivery in China, and has now changed from a discount of US$10 to a flat rate, but last month it was a premium of US$10-20. In addition, the rise in aluminum stocks last week also reflected the increase in supply. Within a week, LME aluminum stocks increased by more than 10,000 tons, and the market began to be confused. In summary, although the U.S. dollar continued to weaken, LME aluminum did not seem to have felt the slightest boost. On the contrary, it was completely normal and tired. The main reason was that the market gradually felt the pressure of supply from China's policy factors; the current average cost of electrolytic aluminum in the domestic market was around 16,000, and there was not much room for future market declines; and a substantial increase in exports would further reduce the pressure on domestic supply. Therefore, Our view still maintains oscillation between. Operation, you can do a little bit more than a single near 15500, short in the vicinity of 17,000. ◆List of Charts ◆ Weekly Trading Exchange Opens Higher Low Trading Volume Open Last Week This Week Last Week Last Week of Week This Week Last Week LME SHFE Note :1. The data is sampled for LME 3-month futures, Shanghai January 2005 contract; 2. The volume and open interest are all the total amount of all contracts; 3. The London LME's positions are for the data of last Thursday, and the positions are changed. For the information on the previous Friday for the previous Friday. ◆ Aluminium import and export and spot reference price import LME3 month + premium discount x exchange rate + VAT + tariff + transportation costs CIF South China Sea price 1790 -4 8.28 x1.17 x1.05 Export Aluminium CIF Raw Aluminium Cost X1.93 Domestic Processing Fee Processing Fee Refund + Transportation Charges - VAT Export Cost / 8.28 LME March x 0.08 100 ÷ 1.17 1746 1790 Note: Export Calculation Formula: {Alumina CIFx1.93 + domestic processing fee x (1-0.08)】+100}÷ 1.17÷8.28; Do not calculate trade premiums; ◆ Exchange stocks ◆ Important news Ø November 15th:: [Reuters, Montreal, November 15th] Global leader in the production of large primary aluminum United States Alcoa stated that the company’s management and its 400,000-ton aluminum smelter strike union, based in Becancour, Quebec, Canada, resumed talks on Monday, and if necessary, the two sides are prepared to continue negotiations on Tuesday. Alcoa spokesman Pierre Despres said that the two sides resumed salary negotiations with the assistance of government mediators. He added that both sides agreed not to disclose the details of the negotiations to the public. The talks aimed to end the strike that has lasted for more than four months. On July 7th this year, about 800 Becancour smelter workers belonging to the North American Iron and Steel Workers’ Federation failed to reach an agreement with the management on salary, employment protection, outsourcing and pensions. The strike has now begun with one third of the smelter. The production capacity runs. Alcoa owns 75% of the smelter's output, and Alcan, the world's second-largest aluminum producer, owns the remaining 25%. Alcan has announced force majeure on contracts involving the smelter. (End) (Source Reuters) Ø November 15th:: [Reuters, Hong Kong, November 15th] Aluminum processor makers said on Monday that due to the power shortage, China may impose an export tax rebate for aluminum building materials in 2005. % to 11% to cool this higher energy-consuming industry. Business people also said that the government will also cancel the 8% export tax rebate for raw aluminum, including primary aluminum, and may reduce the export tax rebate rate for processed aluminum materials such as construction materials. Aluminum processors who bought metal aluminum to make construction materials said that they will continue to export aluminum products next year, as falling domestic aluminum prices will offset the expected decrease in export tax rebates. They said that domestic aluminum prices will be lower than imported aluminum for much of next year, as more aluminum will remain in the country after the tax rebate is lifted. A factory person in Nanhai said, “We will purchase spot aluminum in China. If the import premium is low, we will import it from the previous quarter next year.” There are many building materials production plants in the South China Sea. The Chinese government is also considering taxing aluminum exports and stopping it. Processing of incoming materials and processing of imported materials is expected to reduce the export of aluminum and the import of alumina. Industry officials stated that last year's processing trade accounted for 30% of alumina imports and accounted for nearly 90% of aluminum exports. Ø **Refused to import aluminum next year** Ø Many factories in Nanhai City, Guangdong Province in the past few years The aluminum exported from China is re-imported, and processing of incoming materials or processing of imported materials is carried out. During this process, the factory imports metal aluminum into the country in a tax-free manner, and then exports the aluminum products for tax refund. Traders said that many aluminum processors in the southern provinces are reluctant to enter into the 2005 aluminum import contract and hope to obtain cheaper aluminum from the domestic market. A processing company with an annual aluminum purchase amount of 40,000 tons said that "many processors claim that China's aluminum prices will decline next year... We don't plan to book import contracts. The premium for aluminum imports in 2005 is also higher." Traders reported that China's aluminum prices exported to Hong Kong in 2005 were higher than the London Metal Exchange (LME) spot price by 60-65 US dollars per ton of water, and the spot price of aluminum is currently higher than the LME spot price of 30-40 US dollars. Dealers said that the uncertainty of government policy made Chinese refineries unwilling to accept export orders for 2005, which led to an increase in premiums. The government has explicitly banned alumina imports from alumina plants with a capacity of less than 100,000 tons for processing of incoming materials and processing of imported materials. Traders said that the Ministry of Commerce is still processing such trade applications submitted before the ban. They said that many smelters that had previously permitted direct import of alumina had submitted their applications before repealing export tax rebates. The increase in supply has pushed China's spot aluminium delivery from November to December at a premium of more than US$10 to LME spot price. Last month, it was a premium of US$10-20. LME spot aluminum closed at 1,802/1,803 US dollars per ton on Friday in London. (End) (Source: Reuters) Ø November 17th -: China Aluminum Corporation (Chalco) stated on the 17th that its subsidiary Qinghai Aluminum After a new production line with an annual capacity of 85,000 tons was put into production, the plant's aluminum ingot production capacity will increase from the current 275,000 tons to 360,000 tons in 2005, an increase of 31%. An official of the company said: “The production line was completed as early as September of this year and is currently in trial operation. It is expected that it will be officially put into operation by the end of this year or early next year.” In 2003, the total output of aluminum ingots in the Qinghai Aluminum Plant was approximately 260,000 tons. It is expected to be basically the same this year. The official also stated that although electricity supply in the domestic market was very tight this year, the Qinghai Aluminum Plant had already signed a power supply contract earlier, so production was not affected. (Source: Reuters)

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