Gap demand of supply , LME aluminium shocks are more stronger.


The market for overseas aluminum supply shortage of the market is quite concerned, from the end of 2015 years of LME aluminum prices bottoming out so far, with aluminum prices gradually raise the overseas aluminum production capacity also expand overseas supply and demand trend, so whether the results of torsion, we on the outside of the market supply and demand made carding and analysis:

This year, 1-4 months, the total aluminum consumption growth rate of 4.5%, the outlook for the future, the economic recovery of major consumer areas abroad is good, the second half of the future and aluminum demand growth is expected to continue. In the gap market, in order to improve the margin of safety, from a conservative estimate, we expect consumption growth of 4% in 2017, 4% growth in 2018 throughout the year.

Similarly, in the margin of safety considerations, this estimate take relatively optimistic for the future of supply, namely capacity increment, yield the largest contribution to the assumption of the play, compared with the relatively conservative consumption, the second half of 2017 overseas still has 130 thousand tons of the gap, there is a shortage of 180 thousand tons of 2018 years.

Finally, we use equilibrium output analysis to infer the equilibrium price level of aluminum under the 4% consumption growth rate. Due to the overseas supply shortage, we use the balanced capacity replacement equilibrium output method in cost curve to find the equilibrium price and the corresponding roughly near $2000, and the time required for overseas new production schedule considering the actual production capacity overseas, we expect the second half of 2017 aluminum fluctuations in the $1850-2100. In 2018, there are still supply and demand gap, aluminum prices are relatively strong, is expected to range in the price of 1900-2150 U. S. dollars.

Considering the above, take a relatively conservative approach to consider the demand and supply, so the actual gap may be greater than we expected, so the LME aluminum price may be stronger than our estimate of the equilibrium price.