Core view
\u3000\u30001. The price difference between electrolytic aluminum and alumina continues to expand, and the profits of aluminum enterprises are at a high level. Since 2020, the global demand for electrolytic aluminum has been strong, and the price has continued to rise, driving the continuous expansion of the price difference between electrolytic aluminum and alumina. As of March 11, 2022, the price difference between electrolytic aluminum and alumina was about 16000 yuan / ton, up 26% year-on-year. The upstream raw material prices of the aluminum industry are obviously affected by the downstream. It is expected that the profits of aluminum enterprises will continue to be high under the background of continuous strong aluminum prices. Raw material overcapacity, the industrial chain presents a large and small pattern. Based on the current ceiling production capacity in China and the data of Baichuan Yingfu, the electrolytic aluminum production capacity of 45 million tons or the corresponding alumina and bauxite production capacity of 86.85 million tons and 198 million tons respectively. In terms of alumina, the actual capacity of China’s alumina industry is about 95.34 million tons, which is higher than the theoretical capacity; In terms of bauxite, the current bauxite production capacity of China is about 120 million tons, which is less than the theoretical production capacity, while China is heavily dependent on bauxite import. If the import volume is superimposed, the total supply of bauxite in China will reach 227 million tons in 2021, which is higher than the theoretical production capacity. The overall aluminum industry chain shows a pattern of large up and small down, and the downstream electrolytic aluminum enterprises have strong cost control ability. The upstream production capacity is still increasing, and the bargaining power of aluminum enterprises may be further improved. Judging from the expected new production capacity, there are still plans to expand the production of alumina and bauxite. In 2022, the new capacity of alumina and bauxite is expected to be 3.9 million tons and 6.7 million tons respectively. With the increase of upstream capacity, the problem of overcapacity may be serious, and the industrial chain pattern of electrolytic aluminum will be more obvious. With the increase of production capacity, the upstream cost is expected to be reduced in the future, which will further open the profit space of electrolytic aluminum.
\u3000\u30002. Over the past week, most of the prices of major non-ferrous metals rose, including MB cobalt rose 4.9% and zinc fell 1.2%. In terms of cobalt, as of March 11, 2022, the price of MB cobalt was reported at US $38.2/lb, up 4.9% on a weekly basis. The main reason for the rise of cobalt price is that with the increase of production and sales of new energy vehicles, the production and sales of ternary batteries continue to grow, driving the increase of cobalt demand; In terms of zinc, as of March 11, 2022, the price of SHFE zinc was reported at 26000 yuan / ton, down 1.5% week on week. China’s zinc price fell mainly due to the rise of zinc metal inventory.
\u3000\u30003. Global inflationary pressure intensifies and gold prices are expected to rise. On March 11, 2022 local time, the U.S. Department of labor announced the U.S. consumer price index (CPI) in February 2022. At the end of February, CPI increased by 7.9% year-on-year, a new high since January 1982. Global inflation further intensified and gold prices continued to rise. Comex gold closed at US $1986.8/oz on March 11, up 0.9% on a weekly basis.
\u3000\u30004. Market review. In the past week, 9 of CITIC’s non-ferrous metal sub sectors fell collectively. Among them, the top three sectors with lower declines were gold, lead-zinc and tungsten, with declines of 2.1%, 4.1% and 6.1% respectively. In terms of individual stocks, the top three weekly gains were Pengxin International Mining Co.Ltd(600490) , Chifeng Jilong Gold Mining Co.Ltd(600988) , Anhui Xinbo Aluminum Co.Ltd(003038) , with weekly gains of 10.2%, 10.2% and 8.3% respectively; The top three weekly declines were Ningbo Fubang Jingye Group Co.Ltd(600768) , Tianshan Aluminum Group Co.Ltd(002532) , Zhejiang Huayou Cobalt Co.Ltd(603799) , with weekly declines of 19.9%, 15.8% and 15% respectively.
Investment advice
The price difference between electrolytic aluminum and alumina continues to run at a high level, and relevant production enterprises in the aluminum industry may benefit, such as Henan Shenhuo Coal&Power Co.Ltd(000933) , Aluminum Corporation Of China Limited(601600) , Shandong Nanshan Aluminium Co.Ltd(600219) , etc.
Risk tips
The geopolitical conflict intensifies, the production and sales of new energy vehicles are less than expected, and the completion of real estate is less than expected.
