Chinese Aluminum Spot Market Price Analysis And Empirical Research

In the paper, I studied demand and supply factors in the aluminum market with regression and cointegration methods. Then I forecast prices in the incoming 12 months using GARCH Model, VAR Model and BP Artificial Neural Network respectively. At last I developed Combination Forecasting Method to improve the forecasting results.Through the foregoing analysis, I reached the following conclusions:The upsurges in the demand of aluminum and the price of copper are main propelling forces for the rise of aluminum price in the aspect of demand. Insufficient supply in alumina and the rise of the power price are the most important factors in the aspect of supply. The enterprises producing aluminum should adopt the operation model of alumina-thermoelectricity or hydroelectricity-aluminum to increase their competitive power.There are cointegration relationships among the spot and futures price both in domestic and foreign aluminum markets. China aluminum futures market has the function of price discovery. However, the power of pricing for aluminum in the international market is controlled by foreign market.In the near future, the price of alumina will drop because the output and capacity of alumina will be increased greatly. Nevertheless, economic growth of China will lead to larger demand for aluminum. On the other hand, the surplus capacity of aluminum has been controlled and the power price will continue to upswing. These factors will contribute to the higher price. The final result brought by all demand and supply factors is that the aluminum price will fluctuate at a relative high level. According to the quantitative forecast models, the aluminum price in the future twelve years will fluctuate around 20000 RMB/ton.