On March 29th, the Shanghai Aluminum Futures main contract fell flat and the shocks plunged, closing down slightly across the board. Analysts in the industry believe that Shanghai Aluminum has fallen sharply and may adjust in the short term.

On Wednesday, March 29th, the Shanghai Futures Exchange's (SHFE) aluminum main 606 contract opened at 20,400 yuan, finishing weakly, closing at 990 yuan, down 370 yuan; spot 604 contract closed at 19,810 yuan, down 300 yuan.

Shanghai Jinpeng analyst Cao Zhiyi believes that adjustments may be made in the short-term and the external metal's performance will be closely watched.

Affected by the US interest rate hike, the international base metals peaked at a high level on the evening of the 28th and ended slightly lower. As Shanghai Metal's overall stagflation in the external market prevailed in the previous session, the market was significantly weaker. On the 29th, Shanghai Aluminum adjusted with Shanghai copper, falling lower and lower, and falling. On the 29th, the Yinxian entity is longer and has broken below the 10th line. In the short-term, it may be adjusted at a lower level. Investors may use the interval oscillatory market operation and pay close attention to the performance of the external disk metal.

Sun Bin, an analyst of land futures, believes that the basic supply and demand relationship of aluminum is relatively sluggish, and Shanghai Aluminum should not be bullish.

The basic supply and demand relationship of aluminum is relatively weak. If there is no super-strength traction in the price of copper, the rising kinetic energy of aluminum itself is seriously insufficient. In recent days, the different performance of aluminum and copper has witnessed this again, and will continue to be repeated in the future. Verify this. Therefore, some market participants highly recommend aluminum to everyone as a long last feast, and it turns out to be wrong.

If the price of copper falls in the next step, the price of aluminum will definitely fall. However, the time is not always the same, and the downside is much smaller than that of copper. In turn, copper prices continue to rise and aluminum prices may not rise. Although the reform of the energy pricing mechanism in post-market countries (possibly rumors that the price of electricity may increase by 1 point) is conducive to aluminum prices, the large number of domestically-produced alumina substitutes for imported alumina and the resultant drop in alumina prices at home and abroad can completely offset the rise in energy prices.

Due to the rapid rise in alumina prices in the past two years, domestic and foreign investment booms have started at the same time. Both private capital and private capital have been involved in the alumina industry. The domestic alumina production capacity and actual production have been particularly rapid. In 2005, China produced oxides in total. There are 8.51 million tons of aluminum and 7.2 million tons of imports. In February 2006, it produced 882,000 tons, an increase of 48.3% year-on-year, and cumulative production for the first two months was 1.769 million tons, an increase of 44% year-on-year. Industry experts predict that domestic alumina production this year may reach 1200 to 13 million tons, which can largely replace imports and increase price competition.

Under the current fundamental situation, Shanghai Aluminum should not look too much, it is not yet necessary to fall more than a rebound, and there is no need to chase upwards.

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