Aluminum futures, which suddenly caused financial interest in the latter month of 2005, faced a previous high on Wednesday and saw a sharp decline yesterday. The 0603 contract with a relatively active transaction gapped lower yesterday and closed at 17,110 yuan/tonne. The cause is the large fluctuations in LME aluminum during the three trading days. In the upcoming Christmas holidays and the New Year, the fund is more inclined to obtain short-term benefits, rather than holding positions for a long time.
On Wednesday, LME March aluminum futures closed down 28 US dollars at 2,220 US dollars / ton, compared to Monday's new high of 2287.5 US dollars / ton, compared to a drop of nearly 3%. The main copper futures of non-ferrous metals futures also experienced similar trends during the same period. Some overseas dealers believe that the current situation is typical of end-of-year fluctuations. After the fund has made a slight profit, it has bought again, and then it has reaped profits, and so on.
Although the increase in alumina prices during the current round of aluminum price increases and the reduction in electrolytic aluminum production capacity in China have become major reasons, international credit rating agency Fitch believes that the global aluminum market is still in balance.
Fitch believes that in 2005 and 2006, the electrolytic aluminum producers in Europe will close 650,000 to 740,000 tons of annual production capacity. China’s electrolytic aluminum exports have also gradually contracted under the government’s macroeconomic control. In 2004 alone, China’s electrolytic aluminum exports reached 800,000 tons, accounting for 2.7% of the global electrolytic aluminium smelting capacity. Earlier, Alcoa stated that concerns about electricity costs will lead to a drop in production at the 195,000-ton/year Eastalco smelter in Maryland.
Fitch expects that in the next 12 to 18 months, if the US dollar continues to remain weak, combined with China's control of alumina production capacity, aluminum prices will remain at $0.75-0.85/lb ($1653-1873/t).
The market expects that China will double the export tax for primary aluminum to 10% in January next year, and at the same time reduce the export tax rebate rate from 11% to 6%, further cooling the high energy consumption industry.
Since 2003, China has adopted measures such as restricting credit, increasing electricity prices and taxation to reduce the production capacity of smelters, and cooling the investment in the aluminum industry. However, in the first 10 months of this year, China’s aluminum production still increased by 17.7% over the same period of last year; primary aluminum exports decreased by 3.4% to 98.7602 million tons, but aluminum products exports increased by 68.1% to 573,212 tons. Heavy import pressure Zheng cotton lost five thousand five.
Shiqiao Gaoqiao Futures was affected by import pressure and Zheng Cotton fell again on Thursday. The main contract CF603 fell 110 yuan / ton to close at 14,960 yuan / ton, fell 15,000 yuan / ton mark. Since October, Zheng Cotton has been in the mid-term drop channel. Although it started a round of rebound in early December, it has not been closed at 15,000 yuan/ton or more for two consecutive days. The drop may mean the end of Zheng’s rebound.
The author believes that although there will be supply and demand gaps in the future, import pressure will become the dominant factor in the near future. Low-cost US cotton will have an impact on the domestic market. The current cotton import cost is about 13,000 yuan/ton, but the domestic cotton spot price is about yuan/ton. This caused many acquisition companies not willing to buy domestic cotton, waiting for decentralization of import quotas this year. The reluctant sellers of cotton farmers at current prices have kept the spot price of cotton in a difficult position.
Zheng Cotton's recent contract price of CF601 is 14,950 yuan/ton, and even if the warehouse receipt registration cost is reduced by 600-700 yuan/ton, it is still higher than the current spot price. Therefore, some of the funds that have been arbitrage now begin to move, making the current Zhengzhou cotton warehouse receipts and forecasts continue to increase. As of December 9, warehouse receipts and forecast volume increased to 3,346, equivalent to 66,920 tons, and the repression effect on futures prices continued to increase.
At present, the trend of US cotton is weak and prices may decline, which may further drag down the domestic spot market. Data as of December 6 showed that the fund's net short position on the US cotton significantly increased 7917 to 25,062 hands, which constituted a suppressive effect on the trend of US cotton. Therefore, Zheng cotton may have to adjust with the US cotton. Technically, the price of the main contract CF603 may go down to an earlier low of 14,640 yuan/ton.
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