Core view
\u3000\u30001. LME’s total aluminum inventory continued to decline, supporting the upward trend of aluminum price. As of April 8, 2022, the total inventory of LME aluminum was 616000 tons, a decrease of 66.3% compared with the peak of 1828000 tons in 2021, of which the inventory of LME aluminum in Asia was 574000 tons, with the largest decline in the total inventory; In terms of price, on April 8, 2022, the settlement price of LME aluminum futures was US $3395 / ton, an increase of 132.5% over the low point in 2020. The epidemic has led to a reduction in industry production, and there is limited room for industry expansion in the future. The production and marketing scale of China’s electrolytic aluminum industry is relatively large. In 2021, the effective production capacity of China’s electrolytic aluminum reached 44.859 million tons, accounting for about 58.3% of the world. In the short term, affected by the epidemic situation in Baise, Guangxi and other places, China’s electrolytic aluminum output in the first quarter of 2022 was 9.607 million tons, a year-on-year decrease of 1.8%, which provided a driving force for the decline of the overall inventory of the industry. In the long run, the capacity ceiling of China’s electrolytic aluminum industry is relatively clear. It is expected that the expansion space of the industry’s capacity will be limited in the future, which will drive the continuous low operation of global inventories. The downstream industry continues to boom, and the demand for aluminum is expected to grow. Electrolytic aluminum is mainly used in downstream construction, real estate, transportation, power industry and other fields. In terms of construction real estate, wind data shows that the newly started area of houses in China increased by 28.8% from 2015 to 2019. Based on the three-year construction period, it is expected that the completed area of real estate is expected to maintain a high growth rate in the next 1-2 years. In terms of transportation, according to duckerfronti data, 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. Many demand areas are expected to grow, and aluminum demand may continue to improve in the future. The supply and demand of the aluminum industry is tight, and the aluminum price may continue to strengthen. In terms of supply, as a large electrolytic aluminum producer, China’s supply increment is relatively limited due to the dual impact of the epidemic and policies. In terms of demand, with the continuous increase of aluminum in several main demand areas, the supply and demand of China’s aluminum industry will continue to be tight, driving the continuous decline of global inventory level. With the continuous low operation of global aluminum inventory, LME aluminum price is expected to continue to be strong.
\u3000\u30002. Over the past week, the prices of most major non-ferrous metals fell, including nickel rose 4.0% and neodymium oxide fell 6.3%. In terms of nickel, as of April 8, 2022, the settlement price of LME nickel futures was reported at US $34000 / ton, up 4.0% from a week ago. The main reason for the upward trend of nickel price in China is the continuous expansion of price difference outside China, limited import and limited increment of nickel supply; In terms of neodymium oxide, as of April 8, 2022, neodymium oxide reported 960000 yuan / ton, down 6.3% from a week ago. The main reason for the decline of neodymium oxide is that the downstream is mostly purchased on demand, and the demand is weak.
\u3000\u30003. The conflict between Russia and Ukraine continued, and the gold price remained volatile. It is reported that on April 5, Ukrainian President Zelensky said that the Russian Ukrainian negotiations will continue, but the meeting with Putin may be cancelled. At the same time, he said that Ukraine rejected the provisions on demilitarization and Nazism in the negotiations. The sharp change in Ukraine’s attitude may worsen the current geographical situation between Russia and Ukraine, trigger the fermentation of market risk aversion and provide support for the subsequent gold price. In terms of price, as of April 8, 2022, Comex gold futures closed at US $1947.2/oz, up 1.2% from a week ago.
\u3000\u30004. Market review. In the past week, two of CITIC’s non-ferrous metal sub sectors rose, one sector was flat and six sectors fell. Among them, the gold sector rose 5.5%; The top three sectors were rare earth and magnetic materials, nickel cobalt tin antimony and lithium, with declines of 3.2%, 4.9% and 4.9% respectively. In terms of individual stocks, the top three gainers in the week were Wanbangde Pharmaceutical Holding Group Co.Ltd(002082) , Chifeng Jilong Gold Mining Co.Ltd(600988) , Xinjiang Joinworld Co.Ltd(600888) , with an increase of 15.3%, 12.4% and 11.7% respectively compared with a week ago; The top three weekly declines were Anhui Xinbo Aluminum Co.Ltd(003038) , Jinzhou Jixiang Molybdenum Co.Ltd(603399) , Tdg Holding Co.Ltd(600330) , down 10.1%, 9.1% and 8.9% respectively compared with a week ago.
Investment advice
The aluminum price continues to run at a high level, and relevant production enterprises in the aluminum industry may benefit, such as: Shandong Nanshan Aluminium Co.Ltd(600219) Henan Mingtai Al.Industrial Co.Ltd(601677) Aluminum Corporation Of China Limited(601600) etc.
Risk tips
Commodity prices fluctuated abnormally, industrial policies shifted, and downstream demand was lower than expected.
