Age of Inflation: There is no reason why aluminum prices are falling

On December 11th, the National Bureau of Statistics announced that the CPI (consumer price index) in November 2010 has risen by 5.1%. The CPI is an important indicator for observing the level of inflation. Generally speaking, when the CPI is higher than 3%, it is called inflation. And when the CPI >5% increase, it is called severe inflation. Undoubtedly, this is an era of severe inflation and the year of rising prices. In addition to the well-known soybean, ginger, garlic and other agricultural products, most production materials have risen to varying degrees. In the non-ferrous metal family, the price of gold has reached a record high, reaching a record high of 298.8 yuan per gram (December 15th). The new high, the international gold price reached 1430.2 US dollars / ounce (December 14) high prices, copper prices also reached 68,970 yuan on November 9 / t is the highest point in two years, the international copper price hit a historical high of 9267.5 US dollars / t, there are analysts who predict that the future price may surpass the $11,000/t mark. Rare earth, lead zinc, tungsten and molybdenum and other non-ferrous metals also have a significant increase.

However, how does the aluminum market perform when the prices of almost all products and similar products are highly excited?

According to the main contract in Shanghai ** market, the aluminum price in January is 18010 yuan/t, which is almost the highest price in this year. The lowest price in June out of the year was 13,750 yuan/t, and the price on December 15 was 16,085 yuan/t. The monthly K-line graph shows an approximate V-shaped rally throughout the year, but after the slump on November 11, it seems to have ended the rebound trend and was once again wearing a “sweeping spell”. Copper and gold equivalents are in a series of consecutive rebounds. Aluminum is still low and fluctuates. It is nearing the end of 2010. Will the aluminum market become more confusing? Let us first analyze the relevant factors related to the growth of aluminum prices:

First, from the macroeconomic point of view, on the other hand, from the perspective of macroeconomic control, the central bank raised the deposit reserve ratio six times, raising interest rates only once, even at a rate of 5.1% growth in the CPI, the central bank will still cautiously raise interest rates. Although the instrument is currently heavily negatively charged, it is still necessary to maintain economic growth while suppressing inflation. Therefore, the possibility of raising the reserve ratio once again is still greater than raising interest rates. Therefore, as the CPI falls, the economic focus will return to growth. Come up. The just-convened Central Economic Conference also clearly emphasized that in 2011 China's economy will focus on two aspects: maintaining economic growth first and inflation controlling second, and also expressing that blind inhibition will affect the economic speed. Concern (why not justify the reason for raising interest rates), so maintaining economic growth will provide a solid economic guarantee for aluminum prices.

Second, the increase in cost squeezed aluminum prices down. In the age of inflation, the prices of all means of production will rise, and the aluminum species will not be the exception. There will also be pressure to increase costs. In the current situation, inflation will affect the increase in raw material prices, from the main raw material bauxite to all auxiliary materials and equipment. With varying degrees of increase, from the perspective of labor costs, due to the increase in the price of living materials, labor costs have also risen in the future. Regardless of the related costs such as coal price, alumina price, labor cost price, etc., the increase in cost will increase. It is an important factor supporting the rise in aluminum prices.

Finally, from the point of view of the downstream application market, there are several aspects of aluminum's main application market growth; housing, automobiles, home appliances, and light rail trains. In the housing market, the National Bureau of Statistics announced that from January to November, the total area of ​​housing construction for real estate development enterprises nationwide was 3.843 billion square meters, up 28.6% year-on-year; the new housing construction area was 1.451 billion square meters, an increase of 48.7%; and the area of ​​housing completion was 485 million square meters. With an increase of 9.6%, the area of ​​completed residential buildings was 393 million square meters, an increase of 7.1%. With the accelerating process of urbanization in the future, a large number of rigid housing needs are a fact. The state has also clarified the pace of securing housing construction next year, and it is inevitable that the housing market will continue to expand in the future. In the automotive market, data from the latest China Automobile Association shows that in November this year, domestic cars produced and sold 1.754 million and 1.6971 million vehicles, an increase of 26.11% and 26.86% year-on-year. From January to November, the cumulative production of domestic cars was 160.01 million, and the sales volume (wholesale) was 16.3954 million, an increase of 33.71% and 34.05% year-on-year. It is reported that in December just over half of Beijing's auto sales reached a peak of one year, and it is expected that the auto market will maintain growth in 2011. In the high-speed rail market, in the past year, China's speed has continuously set a world high-speed rail record and become the main force in leading the development of the world's high-speed rail. In the next few years, the development of high-speed rail and light rail in China will be another highlight of aluminum and aluminum alloy market growth. The urbanization of China will also promote the development of urban light rail. In 2011 and the 12th five-year period, China's light rail and high-speed rail will develop rapidly. This series of investments will quickly drive the development of the industrial aluminum market, and the demand for primary aluminum will increase. In summary, under the prospect that the downstream demand market will maintain a growth trend, the aluminum market will have much room for growth in 2011.

In short, the tone of the medium- and long-term aluminum price rise seems to have been recognized, but in the short term, China’s currency tightening tools are still on the horizon and are ready to go. The short-term oscillations of aluminum prices are not ruled out. In addition, aluminum prices have fallen. There are few reasons. As Rusal’s recent forecast stated: China’s aluminum demand continues to be strong, coupled with the recovery of actual demand in the United States, Europe, and Japan, global aluminum demand is expected to increase by 8% in 2011 to 43.8 million. t. Although the specific growth rate remains to be demonstrated, the overall upward trend is basically the same.