As Russian gas exports have been reduced or even disrupted for a time, European gas futures prices have soared, causing the European electricity market to reach record highs almost every day, with German electricity prices soaring above 700 euros per megawatt hour for the first time. Over the past year due to high energy prices, Europe’s aluminum smelting capacity has been reduced by about half, and this trend is expected to intensify in the future. CITIC Securities said that since mid-July, domestic electrolytic aluminum prices have rebounded close to 10%, leading to improved earnings for electrolytic aluminum companies. Electrolytic aluminum industry is expected to improve the situation of strong supply and weak demand, electrolytic aluminum price pivot is expected to rise. Related stocks: Yunluo (000807.SZ), Shenhuo (000933.SZ), China Aluminum (601600.SH), TBEA (600089.SH), Nanshan Aluminum (600219.SH).
It is reported that compared with the same period last year, the cost of electrolytic aluminum has seen a significant increase. Shanghai Steel Union data show that the weighted cost of electrolytic aluminum from January to June 2022 averaged 16764 yuan/ton, up 3498 yuan/ton year-on-year.
It is understood that in the production composition of electrolytic aluminum, electricity is the largest part of the cost side, but also the most important production materials, the tight supply of electricity, enterprises can only stop production, reduce production, the short-term impact is limited, if the subsequent impact continues, the supply and demand market balance may change.
According to Shanghai non-ferrous data, China’s electrolytic aluminum built capacity of about 44.48 million tons, running capacity of about 41.4 million tons in July, capacity start-up rate of about 93%. By region, the built capacity TOP5 regions are Shandong, Inner Mongolia, Xinjiang, Yunnan and Gansu, accounting for a total of 65% of the national capacity. And Sichuan region built a total capacity of about 1.2 million tons, accounting for about 2.7% of the total national energy.
Data show that as of August 22, domestic electrolytic aluminum social inventory of 683,000 tons, compared with the end of July monthly library increased by 12,000 tons. Since this year, the number of electrolytic aluminum inventory shows a downward trend, from February to mid-May this year, the domestic social inventory has been maintained at more than 1 million tons, reaching a maximum of 1.144 million tons.
“Despite the temporary impact on the supply side, but on the demand side, the domestic downstream consumption is still in the off-season, and Sichuan, Chongqing, Jiangsu and Zhejiang and other downstream factories are also facing power restrictions and production cuts, domestic aluminum social inventory to maintain the state of accumulation, the spot market appears to continue to discount the market. In the short term, aluminum fundamentals into the supply and demand double weak state, and macroscopic pessimism again, aluminum prices in the short term will be dominated by a wide range of oscillation.” Shanghai non-ferrous aluminum analyst Li Jiahui said publicly.
Jinrui futures research report analysis, is expected in 2022 the domestic photovoltaic industry new installed capacity of 100GW, overseas new installed capacity is expected to reach 140GW, according to China’s market share projection China’s exports of overseas photovoltaic modules will reach 117GW, the resulting domestic photovoltaic consumption of 1.73 million tons of aluminum this year, an increase of 540,000 tons. As for passenger cars, due to the increase in sales of electric cars and the rise in the amount of aluminum used in a single car, it is expected that this year’s cars will pull 370,000 tons of demand growth.
CITIC Securities said that since mid-July, domestic electrolytic aluminum prices have rebounded close to 10%, leading to improved earnings of electrolytic aluminum enterprises. Factors such as overseas energy crisis, sudden production cuts in domestic aluminum plants and tight power supply have led to a significant drop in electrolytic aluminum supply growth. Although demand at this stage in the off-season, but in the automotive, photovoltaic, power grid and other areas of consumption continued to improve under the pull, electrolytic aluminum industry supply strong demand weak situation is expected to be improved, electrolytic aluminum price pivot is expected to rise.
Performance, in the aluminum industry chain has released 2022 half-yearly report of 10 listed companies, 8 companies in the first half of the net profit attributable to the mother to achieve year-on-year growth, the industry as a whole has maintained a good growth momentum. Among them, Shenhuo achieved revenue of 21.646 billion yuan in the first half of the year, an increase of 39.46% year-on-year; achieved net profit attributable to shareholders of listed companies of 4.536 billion yuan, an increase of 210.07% year-on-year. During the reporting period, the profitability of the company’s main products increased significantly due to factors such as the full commissioning of the Yunnan hydropower and aluminum integration project, and the significant increase in the prices of electrolytic aluminum and coal. Yunnan Aluminum achieved revenue of 24.786 billion yuan in the first half of the year, up 13.11% year-on-year; net profit attributable to shareholders of the listed company was 2.665 billion yuan, up 32.28% year-on-year, achieving the best semi-annual operating results since the company was listed.
Related bids.
Yunnan Aluminum (000807.SZ): The main business is bauxite mining, alumina production, aluminum smelting, aluminum processing and aluminum carbon production, building a complete industrial chain integrating bauxite ore – alumina – carbon products – electrolytic aluminum – aluminum processing.
Shenhua (000933.SZ): The main products of aluminum business are electrolytic aluminum and electrolytic aluminum deep processing products, among which, electrolytic aluminum products are aluminum ingots, mainly used in construction, electric power, transportation and other industries; electrolytic aluminum deep processing products mainly include cast rolled coils, cold rolled coils and aluminum foil, mainly used in building materials, packaging, home appliances and printing and other industries.
Aluminum Corporation of China (601600.SH): According to Aluminum Corporation of China’s 2021 annual report, the company produced 16.23 million tons of alumina and 3.86 million tons of electrolytic aluminum. The company ranks first in the world in alumina production capacity, first in the world in high-purity aluminum production capacity, and second in the world in primary aluminum production capacity.
TBEA (600089.SH): The Guinean legislature approved a US$2.9 billion deal with TBEA to develop bauxite and alumina projects in the West African country.
Nanshan Aluminum (600219.SH): The company has the most complete aluminum industry chain in China, covering upstream alumina and downstream deep processing.
Post time: Aug-26-2022