In the first 10 months of 2021, due to the influence of dual control of energy consumption, many commodity prices "Rose". After October, due to the implementation of the coal supply guarantee policy, the production capacity of many bulk commodities was restored, and their prices began to decline sharply, as was aluminum. However, different from the trend of other commodities, aluminum prices have strengthened again recently after falling, and London aluminum prices have reached a new high since 2008.
So what are the factors behind the sustained rise of aluminum prices?
In essence, the rise and fall of commodity prices are closely related to supply and demand. This round of aluminum prices has reached a new high for more than ten years, mainly due to limited supply, increased costs, and no significant reduction in demand.
Short term epidemic impact + long-term energy consumption double control, resulting in aluminum production reduction
In the short term, both China and overseas have reduced production.
Overseas, since the second half of 2021, the sharp rise in European natural gas prices has led to a surge in power costs, and many zinc and aluminum smelting enterprises have shut down some production capacity due to high power costs. According to SMM statistics, by the end of January 2022, the production capacity of electrolytic aluminum in Europe has exceeded 800000 tons / year, accounting for about 1% of the global electrolytic aluminum production capacity. If natural gas prices remain high, European aluminum enterprises may further reduce production.
In China, since electrolytic aluminum is a high-energy consuming enterprise, the production capacity is mainly concentrated in areas with energy advantages. At present, Shandong, Xinjiang and Inner Mongolia, which are rich in coal resources, are still the main electrolytic aluminum production areas in China. By the end of 2021, the combined production capacity of the above three places accounted for 47% of the total national production capacity.
Recently, due to the impact of the epidemic in Baise, Guangxi, aluminum production has been reduced. According to the data of Antaike, at present, due to the epidemic, the output of Huayin Aluminum Industry in Debao county has been reduced by 1.2 million tons / year, and the production of 420000 tons / year electrolytic aluminum in Guangxi Geely baikuang electrolytic aluminum plant has been stopped. Baise is an important producer of alumina and electrolytic aluminum in China. According to the data of Antaike, by the end of 2021, the total alumina production capacity of Baise was 9.55 million tons / year (accounting for 10.5% of the country), and the electrolytic aluminum production capacity was 2.195 million tons / year (accounting for 5.2% of the country). In the case of epidemic situation and the need for overhaul to resume production, the resumption process will be relatively long.
In the medium and long term, aluminum industry itself is a high energy consumption industry, which is obviously affected by the dual control of energy consumption.
In the long run, aluminum prices will remain high.
Zhitong finance app learned that in October 2021, the national development and Reform Commission issued the notice on matters related to organizing power grid enterprises to purchase electricity on behalf of others, in which high-energy consuming enterprises need to purchase electricity at 1.5 times the price, and also need to pay the transmission and distribution price and government funds. According to the electricity price purchased by Shandong, the electricity price of high energy consuming enterprises basically exceeds 8 gross / kWh.
According to the Sunstone Development Co.Ltd(603612) survey, the theoretical power consumption of electrolytic aluminum is 6320 degrees / ton. However, according to relevant statistics, the power utilization rate of aluminum electrolysis is only 40% - 50%, and more than 50% of the power is wasted in various forms, of which more than 65% of the 50% is lost through the upper heat dissipation (stopping, slotting, slag fishing, etc.). The average power consumption of developed countries is about 13320 degrees per ton of aluminum, and that of China is about 13543 degrees per ton of aluminum.
This also means that for every 0.10 yuan increase in electricity price, the production cost per ton of aluminum will rise by 1330 yuan. With the gradual implementation of the power purchasing policy, the cost of electrolytic aluminum enterprises will remain high.
On the other hand, the price of green power also continues to rise. The national development and Reform Commission issued the implementation plan for promoting green consumption on January 21, the guiding opinions on accelerating the construction of a national unified power market system on January 28, and recently issued the opinions on improving the system, mechanism, policies and measures of green and low-carbon energy transformation. Among them, policy guidance is made on the relationship between green power and energy use right and carbon tax. With the binding of carbon tax and green power, the green power premium will exist for a long time. Although green power is not affected by dual control of energy consumption, the cost side will continue to be under pressure.
The rising cost will restrain the production capacity of aluminum, but it can also effectively eliminate backward production capacity and force the industry to upgrade production capacity. However, as the new production capacity has not been put into operation, the supply of aluminum will continue to decrease and the price will remain relatively high.
The demand of the real estate industry may decline and expand the field of new energy to form a supplement
As the most widely used non-ferrous metal, the terminal demand of aluminum is relatively scattered. In 2020, the demand for aluminum in construction, real estate and transportation industries accounted for 29% and 26% respectively, and the rest are cables, packaging, machinery and consumer goods.
Construction real estate is the largest consumption field of aluminum. Aluminum alloy is widely used in architectural engineering structures and architectural decoration, such as door and window frames, curtain walls, ceilings and partitions. The development of the construction market is closely related to the real estate industry, and there is relatively more aluminum in the housing completion stage. There is a strong correlation between the growth rate of aluminum consumption and the growth rate of housing completion area.
Since 2021, China's real estate enterprises have accelerated the project carry forward, driving the rapid growth of completed area. From January to September, the completed area of houses of national real estate development enterprises increased by 23.4% year-on-year to 510130000 square meters, which has a great pulling effect on aluminum consumption. In addition, due to the strong willingness of real estate enterprises to speed up the construction of stock projects to accelerate payment collection, the housing construction area increased by 7.9% year-on-year in the same period.
However, in recent years, "real estate is not fried", and under the pressure of "three red lines", real estate enterprises tend to be cautious in land acquisition. In addition, financing continues to tighten, and the growth rate of real estate investment is facing downward pressure, which will affect the demand for aluminum to a certain extent.
In terms of transportation, it is mainly automobile manufacturing, railway and rail vehicle manufacturing and container manufacturing, which are the three most widely used sub industries. With the implementation of new energy vehicles, the demand for aluminum has increased significantly.
According to the data of China Energy News, for the same vehicle model, the three electricity system will lead to an additional weight of 200-300kg; At the same time, the lightweight coefficient of new energy vehicles is 1.5-4 times higher than that of traditional fuel vehicles, which means that the lightweight degree of new energy vehicles is lower. Three electricity system usually accounts for 30% - 40% of the weight of new energy vehicles. Its lightweight is the key to realize the lightweight and improve the endurance of new energy vehicles. In the future, the large output of new energy vehicles, the improvement of production technology of replacing steel with aluminum and the continuous improvement of single vehicle aluminum consumption will bring new increment of aluminum demand.
In the power industry, aluminum and its alloys not only have high structural strength and light weight, but also have the characteristics of good conductivity, high ductility and non-magnetic. They are mainly used in wires and cables in power transmission and distribution networks. According to the plan of the State Grid Corporation of China, 12600 kilometers of UHV AC lines and 17200 kilometers of DC lines are planned to be added during the 14th Five Year Plan period, with a total investment of 300.2 billion yuan. The UHV power grid will usher in a new round of construction peak. The transmission cable of UHV power grid mainly adopts steel cored aluminum strand, which is one of the important applications of aluminum instead of copper; It is estimated that during the "14th five year plan" period, the construction of UHV projects will add 1.75 million tons of aluminum, an increase of 17% over the "13th five year plan". The increase of power grid investment also drives the demand for aluminum to some extent.
Therefore, although the demand of the real estate industry may decline, the construction of lightweight and UHV new energy vehicles will form a good supplement to the demand for aluminum, so there will be no significant decline in demand. However, due to the continuous high price of aluminum, it will restrain the downstream demand manufacturers to a certain extent.
Related listed companies
Aluminum Corporation Of China Limited(601600) (02600601600. SH): the leading enterprise in China's nonferrous metals industry, with comprehensive strength ranking at the forefront of the global aluminum industry, is also the only enterprise in China's aluminum industry that integrates the exploration and mining of bauxite, coal and other resources, the production, sales, technology research and development of alumina, primary aluminum and aluminum alloy products, international trade, logistics industry, thermal power generation It is a large-scale production and operation enterprise integrating new energy power generation. In the first half of 2021, the company's alumina output was 8.25 million tons, a year-on-year increase of 14.3%; The output of fine alumina was 2.01 million tons, a year-on-year increase of 3.2%; The output of electrolytic aluminum was 1.96 million tons, a year-on-year increase of 5.5%. The net profit of non parent company is expected to increase from rmb1687.1 billion to rmb1687.1 billion in 2021, with a year-on-year increase of rmb18.1%.
In May 2020, the boffa mine in Guinea was officially opened, and the line from port construction and transportation to Fangcheng Port Huasheng was opened. Aluminum Corporation Of China Limited(601600) is the only company with a super large overseas resource base. The amount of resources can ensure the development in the next 50 years. Through the layout of boffa mine, the self supply rate of bauxite can be greatly improved, and the cost competitive advantage is significant. In addition, new energy accounts for about 50% of the company's electrolytic aluminum production. In the future, the company will continue to layout Yunnan hydropower, Guangxi nuclear power and wind power photovoltaic in Northwest China to improve the proportion of clean energy. Under the requirements of the "double carbon" policy, the company may benefit.
Henan Mingtai Al.Industrial Co.Ltd(601677) (601677. SH): was established in 1997 and is one of the leading aluminum processing enterprises in China. The company mainly produces aluminum sector, strip and foil. At present, the company has a capacity of 680000 tons of recycled aluminum, with a total capacity of 1.2 million tons of aluminum sector, strip and foil in the middle reaches and 20000 tons of aluminum profiles.
In the past, due to the low technical barriers, the midstream processing expanded significantly in the business cycle, resulting in some processing patterns even weaker than the upstream. Therefore, in the past, the midstream processing did not produce obvious bargaining power of the industrial chain to the upstream. At present, based on the optimization of the supply pattern at home and abroad, with the advantages of strong processes, channels and a full range of products, Henan Mingtai Al.Industrial Co.Ltd(601677) can realize the grade protection and utilization of recycled aluminum, rather than the common casting aluminum production line in China, and its deformed aluminum can be directly used as raw materials. With the acceleration of China's waste aluminum supply, the company's recycled aluminum production capacity is expected to further expand and thicken the company's profitability.
