Abstract:Aluminum is essentially a high energy-consuming metal, ** determined by global supply and demand, under the expectation of tight global energy supply, superimposed domestic electrolytic aluminum production capacity to reach the ceiling; At the same time, the growth of aluminum demand has switched from the traditional construction field to new energy vehicles and photovoltaics, and the electrolytic aluminum ** center is expected to move up in the future, and the profitability of related enterprises is expected to improve.
The dual carbon background is superimposed on the supply-side reform, and the production capacity of electrolytic aluminum is approaching the ceiling
From 2001 to 2017, China's electrolytic aluminum production capacity increased from 4.33 million tons to 43.56 million tons80,000 tons, with a compound annual growth rate of 1552%。In 2017, China's supply-side reform of electrolytic aluminum began, and the scale of new production capacity was strictly limited, and all new capacity must be replaced by closing the old capacity to achieve equal or reduced replacement. In 2018, the "Notice on Matters Concerning the Implementation of Capacity Replacement by Electrolytic Aluminum Enterprises through Mergers and Reorganizations" gradually established the production capacity ceiling of the electrolytic aluminum industry at 45 million tons. According to Baichuan Yingfu, as of October 2023, China's electrolytic aluminum production capacity is 472490,000 tons, with an effective production capacity of 429790,000 tons, the total production capacity is approaching the upper limit of 45 million tons, and the future increase is limited.
In addition to the impact of supply-side reform and dual carbon policy, China's electrolytic aluminum production capacity is also affected by the natural climate, because the production of a single ton of electrolytic aluminum needs to consume 13,500 kWh of electricity, and the power fluctuation caused by natural weather will greatly affect the effective release of production capacity. In February 2023, the electrolytic aluminum industry in Yunnan started the third round of power rationing this week, and the overall load reduction ratio was expanded to about 40% based on September 202270,000 tons, accounting for 8 percent of the national electrolytic aluminum operating capacity at that time1%。In addition, the phased change of natural rainfall is contradictory to the continuity of electrolytic aluminum production requirements, the cycle of electrolytic aluminum production capacity from shutdown to start construction is long, the replacement cost is high, and it is impossible to quickly respond to changes in natural weather, and the rigid constraints of the overall production capacity of electrolytic aluminum are amplified, forming a positive feedback on the support of aluminum prices.
From "real estate leading" to "new energy driven", the demand structure of electrolytic aluminum is facing changes
"Dual carbon" helps the new energy industry to have the potential for sustained high growth, and the demand for the aluminum industry is changing at the right time. We believe that at this point in time, the real estate industry is affected by the overall economic cycle, and the ambitious long-term goal of "carbon neutrality" gives the new energy industry a clear growth path, and we expect that with the continuous growth of electric vehicles and photovoltaics, the demand for electrolytic aluminum will gain a new driving engine.
It is estimated that the domestic demand for electrolytic aluminum may reach 3.81 million tons in 2024 and 44.33 million tons in 2025 under optimistic, neutral and pessimistic conditions. Looking forward to 2024, transportation aluminum is still expected to bring significant increments driven by new energy vehicles, while there are obvious differences in construction aluminum, we divide pessimistic, neutral, and optimistic scenarios to measure demand, optimistic scenarios that construction aluminum will be the same in 2024 and 2023, and the pessimistic situation is that construction aluminum will fall to 8.4 million tons, which is slightly lower than the level in 2022, and the neutral situation is pessimistic and optimistic median, and it is expected that the domestic demand for electrolytic aluminum in 2024 will reach 3.41 million tons. Other core assumptions are as follows:
Aluminum for automobiles, based on the growth rate of China's automobile sales % from 2023 to 2025, and the assumption of the penetration rate of new energy vehicles;
PV, based on the assumption of GW of domestic PV module production in 2023-2025, as well as the assumption of GW of new installed capacity.
Consumer durables, with a slight annual growth rate of 23-25 years, an annual increase of 100,000 tons of durable consumer goods and an annual increase of 150,000 tons of aluminum for packaging;
machinery and equipment, flat in 23 years, 24-25 years of annual increase of 10,000 tons;
Aluminum exports, combined with the actual data from January to October, are expected to be 5.31 million tons in 2023, and will be repaired to the intermediate level of 21-22 in 24-25 years, about 5.7 million tons.
It is estimated that the demand for overseas electrolytic aluminum may reach 10,000 tons from 2023 to 2025. Year-on-year growth rate. In terms of overseas demand, according to the WBMS disclosure, from January to July, the global electrolytic aluminum surplus (shortage -670,000 tons, overseas electrolytic aluminum demand will also face a decline in 2023, which is expected to drop from 28.19 million tons in 2022 to 27.09 million tons, considering the marginal improvement of the U.S. inventory cycle, it is expected that 24-25 will be restored to the intermediate level of 21-22, or repaired to 27.6 million tons.
4.The profit center of the electrolytic aluminum industry is expected to move upward, and the low inventory will form an upward support for aluminum prices
The average cost is in a downward stage, and the profitability of the industry is affected by the cost side. With the shortage of thermal coal, coal** has been rapidly rising since September 2021, which has led to a rapid rise in electricity costs, combined with the synchronization of raw materials such as pre-baked anodes, the average complete cost of electrolytic aluminum enterprises has rapidly reached a high of 20,117 yuan per ton in November 2021, and then as coal** is guided by the window, coal** has fallen rapidly; In April 2022, the geopolitical risks of Russia and Ukraine led to global concerns about energy supply, and coal entered the second stage; Since the beginning of 2023, with the further weakening of the impact of geopolitical risks on basic energy**, coal** has fallen, and pre-baked anode** has rapidly fallen to a stable stage with coal leaching and petroleum coke**. In the current stage of average cost decline, the average profit per ton of electrolytic aluminum industry is about 2,200 yuan tons, which is basically in the profitability of the whole industry.
The current situation of low global inventories has not improved, providing long-term upward support for aluminum prices. In 2022, affected by the energy crisis, the production of electrolytic aluminum ** end was frequently reduced, while the demand remained strong, and a round of clearing process was carried out for aluminum at home and abroad, and in 2023, the inventory of aluminum at home and abroad is still at a relatively low level, as of October 24, 2023, the inventory of LME aluminum is 48450,000 tons, at the 6% quantile since 2000; Shanghai aluminum inventory 11610,000 tons, which is in the 34% quantile since 2000. We believe that in the current position, the comprehensive cost of electrolytic aluminum is trending downward, and the low inventory at home and abroad has formed an upward support for aluminum prices, and the profits of electrolytic aluminum enterprises are expected to widen.
5.Electrolytic aluminum investment logic and noteworthiness
Aluminum is essentially a high energy-consuming metal, which is determined by global supply and demand, and under the expectation of a tight balance in global energy supply, the domestic electrolytic aluminum production capacity has reached the ceiling; At the same time, the growth of aluminum demand has switched from the traditional construction field to new energy vehicles and photovoltaics, and the electrolytic aluminum ** center is expected to move up in the future, and the profitability of related enterprises is expected to improve. Related**It is recommended to pay attention to: Yunnan Aluminum Co., Ltd., Shenhuo Co., Ltd., Aluminum Corporation of China.
References**:
1.2023-11-29Soochow** - the leader of green electricity and aluminum integration, enjoy long-term cost advantages.
2.2023-9-21Galaxy**—Liduo gathers** and resonates with costs, opening the value reshaping of electrolytic aluminum profits**.
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