The price of aluminum has rebounded this week. The author understands that the main factors leading to the decline are: a slight pessimism on the macro side and an expected operation on the increase in production capacity in the later period. The market has formed a situation in which the bulls are afraid to enter the market and the short-selling test.

The author believes that it is too early to watch the aluminum market pessimistically.

First, the inventory is still falling sharply. The inventory of aluminum ingots is expected to fall below 500,000 tons this week. Although the volume of goods in the South China market has increased, it still drops by nearly 8,000 tons. At the same time, we conduct research on aluminum plants, and most companies have zero inventory.

Second, the spot high premium water transaction. Despite the decline in aluminum prices, the high-water premiums in various regions continued, and the downstream did not wait too much for the price decline. On the contrary, as the spot was tight, concerns about the late purchase could not be increased.

Third, the market's concerns about increased supply are a bit too radical. According to the survey data, the production time of the new capacity will be mainly after the third quarter, and the contribution of the production will be limited during the year, which will be reflected in 2017. The increase in production in the third quarter will lead to an increase in supply in the fourth quarter, but the progress of the resumption of production is generally slower than that of the new production. At the same time, the resumption of production mainly refers to the price of aluminum. If the price of aluminum falls to 12,000 yuan/ton, The enthusiasm for the resumption of production of the aluminum plant will be hit. It is understood that the resumption of production of Baise Yinhai has been postponed to the fourth quarter.

Fourth, the cost is stable and slightly increased. The author recently conducted a survey on the coal market. The coal prices in the mouths of Shaanxi and Inner Mongolia have been adjusted to varying degrees. The price of coal has increased by 40 yuan/ton. The price of alumina has stabilized at a high level, and will follow the trend of aluminum prices in the later period. There is no downward trend at present. The environmental cost of the aluminum plant has increased. Overall, the cost of electrolytic aluminum is still supported.

V. From a macro perspective, while the reform is in the process of avoiding a hard landing, the state has already expressed support for some short-term stimulus.

The author believes that the strong support for the basic price of aluminum will be reflected in the near-term of the next month, the spot high water and futures continue to fall and form a distorted market, so Shanghai Aluminum will still have a correction in the short-term pessimistic atmosphere. The rebound demand, the price rise and fall should be determined by the supply and demand structure of the market itself, and the speculation is short-lived.