Aluminum Shock Is The Main Factor, And Demand Determines The Upper Limit

[Industrial performance] On the supply side, the weekly output of electrolytic aluminum was 76.47 tons last week, down 0.47% month-on-month. Demand, the operating rate of leading processing enterprises was 63% last week, up 1.2% on a month-on-month basis. As of March 3, the social inventory of domestic aluminum ingots and aluminum rods was 1425200 tons, 3800 tons more than that of last week, including 21000 tons to 1269000 tons of aluminum ingots and 24800 tons to 156200 tons of aluminum rods. The inventory in the bonded area was 50500 tons, a decrease of 200 tons on a month-on-month basis. LME inventory is 564700 tons, and the weekly inventory is 11000 tons.

[Core logic] The policy guidance at the weekend reflects prudent guidance, and the overall market trading is interpreted as short after the opening on Monday. Looking forward to the future, we maintain the view of last week that the lower support still exists, and the upper space depends on demand fulfillment. In terms of supply, the production reduction in Yunnan is gradually implemented, and the limited supply side is based on the support of the aluminum price, and the supply elasticity of superimposed electrolytic aluminum is weak. We believe that this support is difficult to break before the arrival of the flood season (see the obvious easing of hydropower). However, the falling costs need attention. In terms of demand, the data is general, and there is no sign of a strong recovery. Considering that it will take time for the terminal to improve, and domestic policy guidance is not radical, it is expected to be more moderate. To sum up, it is expected that the aluminum price will fluctuate mainly, with strong support at the bottom, and it is still difficult to break through 1.95w at the upper edge.

[Strategic point of view] Unilateral and interval operation. It is recommended to go long along the lower edge of the shock and pay attention to multiple single-entry opportunities near 1.8w-1.83w.