Aluminum prices soared!
On February 10, London Metal Exchange (LME) aluminum futures hit a high of US $3282 / ton, a new high since 2008.
As of the afternoon closing of February 10, China’s futures market Shanghai aluminum had achieved “eight consecutive positive”, and the main contract of Shanghai aluminum closed at 23290 yuan / ton. It once hit a high of 23415 yuan / ton, a new high since October last year. In terms of a shares, the aluminum sector continued to rise, Henan Shenhuo Coal&Power Co.Ltd(000933) , Aluminum Corporation Of China Limited(601600) , Shanghai Huafon Aluminium Corporation(601702) and so on.
At present, the continuous disturbance at the supply side is still the main reason for the sharp rise in aluminum prices.
The epidemic situation in Baise City, Guangxi has raised the market’s expectation of the reduction of electrolytic aluminum supply. Guangxi is one of the major aluminum producing areas in China. According to the calculation of Minsheng securities, by the end of 2021, the production capacity of electrolytic aluminum and alumina in Guangxi accounted for 6.2% and 13.9% respectively.
Baise has the largest electrolytic aluminum and alumina production capacity in Guangxi. According to the data of Antaike, Baise has a total alumina production capacity of 9.55 million tons / year and electrolytic aluminum production capacity of 2.195 million tons / year, accounting for 76% and 81% of Guangxi Province respectively.
Overseas, due to the high cost of electricity price, more and more European aluminum smelting enterprises choose to reduce or stop production.
Slovalco, a Slovak aluminum smelter controlled by Norsk Hydro, decided to reduce the capacity utilization to about 60%. The company’s CEO said that the electricity price in 2022 was 150 euros per megawatt hour, three times that of last year. If we produce at this price, the company will incur tens of millions of euros in losses. He hinted that the possibility of complete shutdown of the smelter in 2022 is also great.
Slovalco is not the first European aluminum company to announce production cuts due to soaring electricity prices. As early as last December, French Dunkirk aluminum company, Romanian aluminum giant alro Slatina and black mountain aluminum enterprise kombinat aluminijuma Podgorica successively announced production reduction, which plunged the European aluminum industry into a “production reduction tide” and continues to this day.
The research team of Shanghai Nonferrous Metals network said that under the influence of the overseas power crisis, the output reduction of aluminum smelters continued to ferment, and the LME aluminum inventory has decreased continuously for more than half a month, stimulating the sharp rise of the external market. From the perspective of China, on the one hand, there is a lack of imported aluminum ingots, on the other hand, the resumption of production of aluminum enterprises that previously reduced production is slow, and the circulation of aluminum ingots in the market is tight. In terms of consumption, the downstream aluminum processing enterprises gradually return to work after the festival, and the market is optimistic about the consumption after the festival. The price of electrolytic aluminum is expected to remain high.
Benefiting from the demand explosion and high aluminum price under the background of “double carbon”, the aluminum industry ushered in a high light moment last year, and the profitability of aluminum enterprises increased significantly.
As of February 9, 23 listed aluminum enterprises have issued performance forecasts for 2021, of which 20 have increased their net profit in advance, accounting for 86%. The net profit growth rate of 10 listed aluminum enterprises is expected to double, of which Henan Shenhuo Coal&Power Co.Ltd(000933) is expected to have the largest net profit growth of 767.04%.
Pre increase of A-share aluminum enterprises in the top ten market capitalization
“Lvmao” Aluminum Corporation Of China Limited(601600) is expected to realize a net profit attributable to the parent company of 4.9 billion yuan to 5.3 billion yuan in 2021, with a year-on-year growth rate of 561% to 615%. Aluminum Corporation Of China Limited(601600) said that in 2021, the company grasped the market opportunity of high aluminum price, realized a significant increase in the gross profit of main products compared with the same period last year, and steadily improved the company’s operation level.
Huabao Securities believes that affected by the global trend of carbon reduction and emission reduction, the supply and demand pattern of electrolytic aluminum industry is expected to continue to improve, foreign geopolitical risks make the supply side more vulnerable, and the high profits of aluminum smelting are expected to be maintained for a long time. The broker suggested to pay attention to alumina and electrolytic aluminum leaders with overseas low-cost raw material channels and strong integration advantages.
