This time, in Shanghai aluminum futures trading, CITIC futures seat once again crowned the crown of "octopus emperor". Stand in the same camp with it, still have in grain futures, Haitong futures seat.

China Securities Journal reporter found that since May this year, Shanghai aluminum accelerated the decline, the cumulative decline of more than 3000 points, which made the "octopus brother" behind it firmly determined not to relax the short single effortlessly made a lot of money. Not counting the change of contract, adding or reducing positions and other factors, based on the 3,500 point drop in Shanghai aluminum futures price, since May, about 45,000 short positions in CITIC, COFCO and Haitong futures in Shanghai aluminum have gained about 790 million yuan.

Who is Shanghai aluminum accelerated decline behind the driving hand

The Shanghai aluminum index fell more than 27 percent for five straight years from 2010 to 2014, wiping out more than half of the 47 percent gain recorded in 2009. This year, Shanghai aluminum continued the downward trend, accelerated in May. Recently, the lowest price of aluminum fell to 10360 yuan/ton, from the 2008 financial crisis when the low point is only 240 yuan/ton!

The same period of copper and zinc performance is stagflation and resistance, so, who is behind the accelerating decline of Shanghai aluminum?

The excess capacity of domestic aluminum market has been an indisputable fact. Since 2011, the apparent growth rate of domestic aluminum consumption has slowed down year by year, while the expansion of production capacity has begun. According to the statistics of the trade association, as of the end of 2014, the domestic production capacity has reached 44 million tons, while the output is only 23.684 million tons, and the capacity utilization rate is just over half, compared with the international capacity utilization rate of about 90%.

Ren Xudong, executive vice president of the China Nonferrous Metals Industry Association, said recently that China is a major producer of aluminum industry and ranks first in the world in the output of alumina and other fields. Since 2013, more than 3.7 million tons of electrolytic aluminum capacity has been dissolved in various parts of China, but the existing capacity is still more than 30 million tons.

Authoritative reports also show that the aluminum industry is still in the pattern of capacity expansion faster than demand growth in 2015-2016.

For the aluminum price trend is significantly weaker than the performance of other non-ferrous metals, Baocheng futures financial research institute assistant director Cheng Xiaoyong said that the recent aluminum prices continue to fall, other metals are against the fall, the obvious differentiation of logic lies in the fundamentals of aluminum appeared a big change.

Cheng Xiaoyong said that the fundamentals of the aluminum market weak logic contains two major factors. First, because of local government subsidies to aluminum smelter, such as Gansu local government to Chinalco Liancheng aluminum smelter to give 1-2 yuan electricity price subsidy, resulting in the smelter to stop shutting down capacity. Second, the reform of the national electricity price is started again, so the industrial electricity consumption may further decline, which leads to the reduction of the scale of aluminum production capacity, or even the cessation of production of some production capacity.

"The downward shift in the price of electricity may lead to a drop in the cash cost of aluminum smelters by 400-500 yuan per ton. Coupled with over 1 million tonnes of social stocks to be worked off, aluminium has fallen to reflect lower costs and a less than expected supply squeeze." Cheng Xiaoyong said.

Investors also seem to have little hope for the aluminium market. In the first half of this year, an episode in the aluminium industry underscored investors' pessimism about aluminium prices. China's Hongqiao Group Co. overtook Rusal Corp. and Rio Tinto to become the world's largest aluminum producer, and its net profit rose by about a third. But investors have reacted to the company's expansion into aluminium producers in anticipation of falling aluminium prices by sending its shares down the most since it went public in 2011.

Recently, with 80 years of history of "China's first aluminum" Aluminum Fushun Aluminum Co., Ltd., the news that the full production of electrolytic aluminum production line on October 24, also once again kindled the pessimistic sentiment of investors on the aluminum market.

But Qin Jing, a non-ferrous metals researcher at Changjiang Futures, thinks such industrial misery is not necessarily a bad thing. She said that after Chinalco's suspension of production, Fushun Aluminum also implemented the shutdown of the entire production line, Chinalco total production reduction of 490,000 tons. In addition, the period of aluminum stopped falling, bearers continue to maintain the attitude of reluctant to sell, the market circulation of goods is tight, intermediaries actively enter the market, the discount range of East China narrowed, South China market turnover than East China premium of 120-140 yuan/ton. Short-term tight spot market circulation will give support to aluminum price rebound, but if the scale of production cuts do not increase, the rebound height will still be limited.