This article mainly analyzes the medium-term trend of Shanghai Aluminum from the following aspects. First, the global aluminum supply exceeds demand has not changed, but the consumption growth is significant Between 1999 and 2003, the global primary aluminum production growth rate was 4.24%, while the consumption growth rate was 4.18%. The output growth was slightly faster than the consumption growth rate. As a result, global primary aluminum inventory levels have continued to increase. Therefore, the overall characteristics of the global aluminum market in the past five years is oversupply, and due to the acceleration of supply growth, the surplus has increased in recent years. However, due to the strong economic recovery in the United States and Japan in the first half of 2004, aluminum consumption has increased significantly, greatly exceeding the average level in the past 10 years. The increase in consumption in the first half of 2004 was 2.3 percentage points higher than the increase in output. Therefore, after three consecutive years of severe market surplus, the relationship between supply and demand has undergone a fundamental change in the near future. According to estimates by CRU, from January to September this year, the global aluminum output will reach 29.56 million tons, an increase of 5.7% over the previous year, while consumption may reach 26.97 million tons, an increase of 8.1%. Second, the Chinese government's regulation of the domestic aluminum industry helped stabilize the price of aluminum. The adjustment of the electrolytic aluminum industry by the Chinese government since 2001 has led to the production of about 750,000 tons of electrolytic aluminum. According to the statistics of the China Nonferrous Metals Industry Association, although the cumulative output from January to August reached 4.28 million tons, an increase of 24.7% over the same period of last year, the output of electrolytic aluminum in the country was limited by high prices of alumina and limited power and energy. The growth rate was still relatively slow during the first eight months. China's electrolytic aluminum plant operating rate has dropped from 97% last year to 90% this year. At the same time, since the export tax rebate at the beginning of this year has dropped from 15% to 8%, it will have an impact on domestic aluminum exports. If the export tax rebates are completely cancelled next year, it is expected that China's exports in 2005 and 2006 will be far lower than in 2003. As the world’s largest exporter of primary aluminum, the reduction in China’s export supply will contribute to the slowdown in the supply of aluminum in the world and the steady increase in aluminum prices. After October 2004, the Chinese government took a relatively new step to curb the overheated development of the aluminum industry. The Ministry of Commerce and the General Administration of Customs issued a notice to strictly control the alumina processing trade. This seems to be detrimental to Shanghai aluminum in the short term, but in reality If the China Aluminum Industry Corporation began to adjust its industrial structure to embark on the path of sustainable development, it will consolidate the long-term bullish foundation for Shanghai Aluminum. 3. China's high aluminum oxide prices and energy shortages have become the driving force for Shanghai Aluminum's rise. Currently, domestic old alumina plants are expanding their production scale, but the domestic alumina production rate has not kept pace with the development rate of electrolytic aluminum production, and it has also been applied to foreign raw materials. Reliance deepens. Globally, global supply of metallurgical-grade alumina began to become tight in 2003, and its supply and demand conditions did not change significantly in 2004. In the past 10 years, the global alumina plant operating rate averaged about 94%, and in 2003 the operating rate has reached 96%. The operating rate for the first half of this year has exceeded 98%, and almost no spare capacity has been used. In the first half of this year, the average spot alumina price in the international market was US$424/ton, which was 60% higher than that in the same period of last year. The average price of imported alumina ports in China was 4,940 yuan/ton, which was a year-on-year increase of 72%. As for the rising factors, the increase in domestic and foreign markets is basically the same. Compared with electrolytic aluminum production, the development of alumina investment is large, the construction period is long, the production process is relatively complex and the risk is large. Therefore, it can be said that the possibility of high alumina prices still exists in 2005 and 2006, which constitutes an upward support for Shanghai Aluminum's positioning. Fourth, the two possible types of technical aluminum and aluminum prices are cost-driven. Shanghai aluminum oscillated slightly around 16,000 yuan. The direct ascent would be short-term bullish movements when the total position was below 150,000 hands, and then it was blocked by the preservatives near 18,000 yuan. The second is the balanced supply and demand promotion. With the evolution of time, Shanghai Aluminum oscillated in the range of 17,000-18,000 yuan, speculation and arbitrage bulls to hedge their short positions, and the overall position surged to over 200,000. I believe that at this time, under the strong momentum of aluminum, Shanghai Aluminum will soon rise and it is expected to break through. 18,000 yuan psychological top. However, the balance of supply and demand-driven growth must meet the following conditions: First, the domestic aluminum market fundamentals have to break the current signs of excess; Second, it is sufficient to absorb the resistance of selling oil, especially in the vicinity of 18,000 yuan; Third, the total increase in positions of Shanghai aluminum Up to 150,000 or more; Siyilun Aluminum has stabilized at more than 1,800 U.S. dollars and has a tendency to further strengthen. In the short term, it is still a good time for Shanghai Aluminum to rise substantially, but it can be roughly judged that the chances of entering the post-2005 strategic build may be more mature.