Event: on February 7, 2022, the epidemic spread in Baise, Guangxi, and the production capacity of 420000 tons of electrolytic aluminum in baikuang and 1.2 million tons of alumina in Huayin Aluminum stopped production. According to the report of Tianxia aluminum news, the production capacity of 420000 tons of baikuang aluminum plant was closed due to the diagnosis of employees and the shortage of workers. The electrolytic aluminum production capacity of the plant was 500000 tons and 80000 tons had been shut down due to the power restriction last year. Due to the sudden evacuation of personnel, the aluminum liquid in the electrolytic aluminum cell solidified, and the production can be resumed after major repair in the future. It is expected that the resumption of production will take a long time; In terms of alumina, about 1.2 million tons of Huayin Aluminum stopped production in Debao. The start and stop of alumina is relatively easy and the production recovery is fast.
The epidemic situation in Guangxi has spread, and prevention and control has become stricter. On February 4, 2022, when Debao in Guangxi tested the returnees, it was found that one person tested positive for covid-19 virus nucleic acid. After that, the epidemic situation in Guangxi began to spread, and the new cases increased rapidly. The epidemic situation in Guangxi was mainly concentrated in Baise City, which was under strict control. The first confirmed person of baikuang Tianyang worked in Tianyang aluminum plant on February 3 and 4. The risk of infection among colleagues was high. The company's employees were isolated, and the aluminum plant was shut down due to the shortage of production personnel.
The aluminum industry chain in Guangxi has been improved, and the supply of electrolytic aluminum has decreased. Guangxi has a sound aluminum industry chain and is an important province for alumina and electrolytic aluminum production. In 2021, the output of electrolytic aluminum / alumina in Guangxi accounted for 6.0% / 14.6% of the country respectively. By the end of 2021, the output of electrolytic aluminum / alumina in Guangxi accounted for 6.2% / 13.9% of the country respectively. Due to energy consumption control, the output of electrolytic aluminum in Guangxi has decreased month by month since the fourth quarter of 2021. The utilization rate of electrolytic aluminum capacity in 2021 was 90.1%, down 4.0pct from 2020. Guangxi alumina is less affected by energy consumption control, and its output is gradually rising. The alumina capacity utilization rate in 2021 is 94.2%, an increase of 1.9pct compared with 2020.
The epidemic disturbance is strong, and the supply of aluminum industry chain is further tense. The epidemic situation in Guangxi is concentrated in Baise. Baise is an important aluminum industry chain base in Guangxi. The production capacity of electrolytic aluminum / alumina is 2.195 million tons / 9.55 million tons respectively, accounting for 83.3% and 76.7% of the total production capacity in Guangxi. The production capacity of electrolytic aluminum / alumina stopped in Baise accounts for 1.0% / 1.3% and 15.8% / 9.4% of the total production capacity in Guangxi respectively. Affected by the control of energy consumption and the shortage of electric power in Southwest China, the output of electrolytic aluminum in Yunnan and Guangxi continues to decline, and the output of electrolytic aluminum in China also remains low. This epidemic will further aggravate the tension of electrolytic aluminum.
Guangxi's alumina production capacity is higher than that required for electrolytic aluminum supporting facilities. It is a large province of alumina output. If the epidemic continues to ferment, it may affect the alumina supply in Yunnan. It is estimated that in 2021, the outward transfer volume of alumina in Guangxi was about 6.7 million tons, with a year-on-year increase of 38%, accounting for 59% of the total output of alumina in Guangxi. The outward transfer capacity of Baise alumina was about 5.16 million tons, accounting for 54% of the total capacity of alumina. The epidemic not only affects the production of enterprises, but also has a great impact on transportation. It is expected that the outward transfer of alumina will decline significantly. Alumina in Guangxi is mainly transported to Yunnan. If the epidemic develops further, the alumina supply in Yunnan will be tight.
Investment suggestion: the epidemic has reduced the production of aluminum industry chain, made production and transportation difficult, and further strained the supply of electrolytic aluminum. We first recommend Henan Shenhuo Coal&Power Co.Ltd(000933) , focusing on Shandong Nanshan Aluminium Co.Ltd(600219) , Tianshan Aluminum Group Co.Ltd(002532) , Aluminum Corporation Of China Limited(601600) .
Risk tip: the supply side releases more than expected, the demand is less than expected, and the cost rises sharply.
