Aluminum entering the rising channel Copper-aluminum-weakening pattern is expected to turn around Jinniu Futures Liu Huiyuan (021)-36 In November 2001, the base metals started to bottom out, and LME copper in March rose from US$1336/tonne to US$3,145/tonne. Up to 135%, while LME March aluminum from the 1262 US dollars / ton rose to 1880 US dollars / ton, an increase of only 49%. The reason for this pattern of strong copper and aluminum is that as long as there were two production cuts in copper mines in 1998 and 2001, which led to the closure of some of the production capacity, the supply growth slowed down after the recovery of the global economy. During this period, China’s real estate is rapidly developing, driving demand for aluminum and setting off an upsurge in the construction of electrolytic aluminum plants. China became a major producer of aluminum in 2001, and aluminum production capacity grew rapidly. However, aluminum supply and demand fundamentals are undergoing subtle changes. Closer involvement of investment funds has opened the upside of aluminum prices. Aluminum has entered a rising channel, and the pattern of strong copper and aluminum is expected to gradually reverse. Demand has grown steadily After the two-year decline in primary aluminum consumption in the United States, demand began to grow rapidly in 2004. The rapid development of construction real estate and heavy-duty truck manufacturing in the United States has led to strong consumption of aluminum. North American aluminum orders increased in the first half of the year. 15.4%, while new housing starts and other indicators remain at high levels, indicating that primary aluminum consumption in the United States will remain relatively strong. It is expected that US consumption will reach 6.6 million tons for the full year, up 9% year-on-year. The full recovery of Japanese manufacturing industry promoted a significant increase in primary aluminum consumption, especially the demand for aluminum products in the electrical equipment manufacturing industry is particularly strong. In the fourth quarter, Japan's aluminum premium reached 91 US dollars, which is a high level since the second quarter of 1995. Although China's macro-control has inhibited the consumption of aluminum, after August, domestic consumption of primary aluminum began to heat up. After the electricity shortage began to ease, there was an upsurge of aluminum in Jiangsu, Zhejiang and Shanghai. According to incomplete statistics, this area of ​​light is about. There are 12 aluminum processing material production lines under construction, most of which will be put into production in 2005. It is expected that the growth rate of primary aluminum consumption in the year will exceed 15%, reaching about 6 million tons. Slow supply growth Although capacity of electrolytic aluminum is still expanding, the capacity utilization rate of aluminum oxide is already approaching the limit, which has inhibited the production of electrolytic aluminum, and the spate of strikes in July and August made the supply of primary aluminum worse than ever. According to the data released by the Aluminum Association, global primary aluminum output (excluding China) only increased 400,000 tons in the first half of 2004. In China, due to the need to eliminate obsolete small self-cultivation tanks, some small aluminum plants will continue to be shut down, and the interruption of Jamaica’s supply of alumina to China due to the hurricane will continue for a long time. After undergoing macro-control, China The aluminum production will shift from fast to steady development. LME stocks continued to decline, and aluminum spot turned into a premium. LME aluminum stocks continued to decline from 1.453 million tons at the beginning of the year to 680,000 tons on October 8. Although some stocks may have been converted into hidden stocks, they have been hoarded. The major port inventories of Japan and the United States are at a relatively low level over the years, indicating that the supply of aluminum is indeed in a state of shortage. More recently, the spot of LME aluminum has turned from premium to premium and has continued to magnify, clearly demonstrating the tight supply of primary aluminum. Positions increased substantially With the gradual improvement in the supply and demand situation of primary aluminum, the fund began to do a lot in the aluminum market. The total position of LME aluminum has rapidly increased from 360,000 in early September to more than 440,000 hands on October 8. Far more than the increase in the number of positions held by copper over the same period. Such a large open interest has already provided the basis for launching a large market. At the same time as the open interest, LME March aluminum has set a new high during the year, and aluminum has begun to enter the main rise. The main upward momentum of copper prices lies in the continuous expansion of the supply gap and the continuous decline in inventories. From the above analysis, it can be seen that aluminum is taking the lead in copper. The supply and demand of primary aluminum is undergoing subtle changes similar to fine copper, which is more recent than copper. In the stock market, copper prices have already entered the high risk area, while aluminum prices have just entered the main rising wave. There is more room for growth. It is expected that the performance of aluminum will be stronger than that of copper in the fourth quarter of this year. Copper arbitrage opportunities, but must grasp the opportunity to avoid being hurt by copper's crowded market.