Core view
\u3000\u30001. It continued to hit a record high, and Lun aluminum now has the largest increase in a single week in history. Last week, the price of Lun aluminum rose 13.6% in the week, which is now the largest weekly increase since it was listed, and the price hit a record high. On March 4, the LME aluminum futures price reached US $2867.0/ton, with a weekly increase of 13.6%, both reaching a record high. In terms of supply, the Western sanctions against Russia are continuously escalating, which has driven the current shortage of international aluminum supply from two aspects. First, in 2021, Russia’s overall electrolytic aluminum production capacity was about 4.02 million tons, ranking second in the world. In the context of the current war, the production and trade of the Russian aluminum industry has been limited. On March 2, Alcoa announced to suspend trading with Russia and stop purchasing raw materials from Russia. Canon, the world’s largest commodity trader, also began to re-examine its trading business in Russia. Second, the conflict also affected Russia’s natural gas supply to Europe, making European electricity prices continue to rise. As of January 2022, the average monthly electricity price in Germany has reached 167.87 euros / MWh, with a year-on-year increase of 218.0%. According to Reuters, “beixi-2” natural gas pipeline company is currently considering filing for bankruptcy. With the stagnation of Russian natural gas supply to Europe, the rising trend of European electricity price may continue further, affecting European electrolytic aluminum production. In terms of demand, from the perspective of industrial chain, electrolytic aluminum is mainly used in downstream construction, real estate, transportation and power industries, accounting for 63% of the demand distribution. In terms of construction real estate, the newly started area of houses in China increased by 28.8% from 2015 to 2019. Based on the three-year construction period, the completed area of real estate is expected to maintain a high growth rate in the next 1-2 years. In terms of transportation, the single vehicle aluminum consumption of new energy vehicles is about 1.4 times that of ordinary vehicles. With the continuous increase of production and sales of new energy vehicles, the demand for aluminum is expected to increase. In terms of power, the promotion of UHV, photovoltaic and wind power will drive the demand for aluminum in the power industry. The 14th five year plan plans to build the “24 AC and 14 DC” UHV project, with a total investment of 380 billion yuan, far ahead of the two five-year plans. Under the dislocation of supply and demand, aluminum prices are expected to rise further. Russia’s aluminum production capacity accounts for 5.2% of the world’s production capacity, ranking second. Under the continuous escalation of the conflict between Russia and Ukraine and the expansion of sanctions against Russia by western countries, Russia’s aluminum supply may be more affected in the future, and the global aluminum price is expected to rise further.
\u3000\u30002. Over the past week, most of the prices of major non-ferrous metals rose, including LME nickel rose 20.6% and lead fell 0.8%. In terms of nickel, as of March 4, 2022, LME nickel price was reported at US $29800 / ton, with a weekly increase of 20.6%. The main reason for the rapid rise of nickel prices is that under the conflict between Russia and Ukraine, the West expanded sanctions on Russia, which accounts for 7% of the world’s nickel production; In terms of lead, as of March 4, 2022, the price of SHFE lead was reported at 15000 yuan / ton, down 0.8% week on week. The main reason for the decline in China’s lead price is that downstream battery enterprises are about to enter the traditional off-season.
\u3000\u30003. The conflict between Russia and Ukraine continued to escalate and gold prices rose. On March 3, 2022, the second round of negotiations between Russia and Ukraine ended. The two sides did not reach a consensus on the ceasefire and only agreed to establish humanitarian channels. The negotiations will continue in the future. Affected by the intensification of the conflict between Russia and Ukraine, gold prices rose sharply. On March 4, Comex gold closed at US $1969.5/ounce, up 4.1% from the previous week.
\u3000\u30004. Market review. In the past week, four of CITIC’s non-ferrous metal sub sectors rose and five fell. Among them, the top three sectors were copper, aluminum and gold, with increases of 4.2%, 3.0% and 2.6% respectively. In terms of individual stocks, the top three weekly gains were Sunstone Development Co.Ltd(603612) , Henan Shenhuo Coal&Power Co.Ltd(000933) , ST Garden City, with weekly gains of 15.9%, 14.6% and 12.9% respectively; The top three weekly declines were Henan Mingtai Al.Industrial Co.Ltd(601677) , Jiangsu Boqian New Materials Stock Co.Ltd(605376) , and Yunlu shares, with weekly declines of 14.9%, 8.9% and 8.7% respectively.
Investment advice
The global aluminum price continues to rise, and aluminum production enterprises may benefit, including Henan Shenhuo Coal&Power Co.Ltd(000933) , Shandong Nanshan Aluminium Co.Ltd(600219) , Aluminum Corporation Of China Limited(601600) , etc.
Risk tips
Abnormal fluctuations in commodity prices, lower than expected production and sales of new energy vehicles, lower than expected completion of real estate, etc.
