The pursuit of funds to create a strong upward trend in aluminum prices hit the market
For the relatively "boring" copper market, the performance of the recent aluminum market is even more eye-catching. Domestic aluminum prices and London aluminum prices are showing a rising trend.
Compared with the increase rate, after the holiday to the present, London copper rose 4% higher, while London aluminum rose 5% higher, Shanghai aluminum rose far more than Shanghai copper; from the change in positions, after the holiday Up to now, London's copper positions have decreased by nearly 9,000, while London's aluminum positions have increased by more than 20,000, and Shanghai Copper's positions have decreased by nearly 7,000, while Shanghai Aluminum's positions have changed little. By comparison, it is not difficult to find that aluminum has recently been favored by the market relative to the star varieties of copper.
From July to August, arbitrage funds have been active in the aluminum market, during which the operation of arbitrage funds has gone through two phases.
1. In the Shanghai aluminum market, “buy away and throw away†and “buy Shanghai aluminum aluminum†in the domestic and foreign markets. Since entering the month of September, Shanghai Aluminium has shown a turbulent uptrend, and as early as August, there has been an inverted base pattern between the Shanghai aluminum contracts, which is the so-called near strong and weak. It is precisely because of the tight spot supply, and the increasing degree of tension, which provides a good opportunity for arbitrage funds to enter the market. Some hot money poured into the Shanghai aluminum market. They started buying near-month contracts while leaving far-month contracts. As shown in Figure 1(I), under the influence of arbitrage funds, the spread between Shanghai Aluminum's recent month contract and the far month contract has gradually widened, and the continuous rise in the premium between spot and futures has in turn supported the rise of the recent month contract. Arbitrage operation has achieved very obvious results.
At the same time, as domestic aluminum prices have been lower than London's aluminum prices for a period of time, and domestic aluminum exports have once enjoyed high tax rebates, domestic aluminum exports to the international market can gain considerable profits. This objective background has created good investment opportunities for inter-city arbitrage funds. As a result, arbitrage funds in the two markets to "buy Shanghai Aluminum aluminum throwing aluminum" operation, and this part of the arbitrage in the domestic purchase of Shanghai Aluminum has become another driving force for the rise.
2, in the aluminum market in Shanghai "buy far thrown near." After the holiday season, Shanghai Aluminum still showed a turbulent uptrend, but in the days before the delivery of the October contract, the spot contract price gradually moved closer to the October contract price. At the same time, the rate of compensatory growth for the far month contract accelerated. This shows that after the spread of the contract between the recent month and the far month has gradually widened, the arbitrage fund “buy far away†has begun to look for opportunities in the Shanghai aluminum market. From Chart 1(II), it can be seen that by October 11th, the spread between the November and January contracts reached a relatively high level, and then after January and January the contract rose faster, far stronger than the November contract. The arbitrage fund “buy far†has once again made the aluminum market more active and continues to provide incentives for aluminum prices to rise.
It is the continuous pursuit of funds, Shanghai Aluminum has recently become a bright spot in Shanghai futures varieties. Looking ahead, the trend of aluminum in London will become the key to the success of Shanghai Aluminum’s gains. From the current situation in the London market, during the LME annual meeting, copper continued to fluctuate and traded relatively lightly, but London Aluminum has seen a trend of rising prices. The current aluminum price has risen to more than 2,700 US dollars. The position has also been expanded to 560,000 and the market has broken through to the upside. Therefore, if London Aluminum expands its position after it stands at $2,700, Shanghai Aluminum’s gains will continue.
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