SMM News: 1. Some alumina enterprises in Shanxi are facing the suspension of production, and nearly 5% of the country's production capacity is directly affected. 2. The profit of 19Q2 electrolytic aluminum enterprises is expected to increase significantly compared with the previous month.
Pay attention to the disturbance of Alumina supply and the improvement of profit of Aluminum Enterprises
Affected by environmental protection factors, some alumina production capacity in Shanxi is facing shutdown, nearly 5% of the national alumina production capacity will be directly affected, which is expected to promote alumina prices to continue to rise in the medium to short term. Recently, the price of electrolytic aluminum has also risen slowly. In the case of downward cost items such as power and prebaked anode, we judge that the performance of aluminum enterprises or month-on-month improvement in the second quarter. The current rapid decline in inventory confirms that demand is strong, follow-up we believe that real estate consumption or maintain resilience, electricity, automotive consumption is expected to strengthen in the second half of the year, the overall demand is expected to increase. On the supply side, most of the new capacity lacks an absolute cost advantage, supply growth may lag behind changes in demand, and the overall profitability of the industry this year may be significantly better than last year. On the subject matter, we have recently proposed to focus on the target of high alumina self-sufficiency rate.
Some alumina enterprises in Shanxi are facing suspension of production, and nearly 5% of the country's production capacity is directly affected.
Xinfa alumina in Jiaokou of Shanxi Province was corrected by a working group set up by the local government because it was involved in the environmental protection problem of filtrate leakage of red mud dam. Affected by this problem, Shanxi Xiaoyi, Jianguo and other areas of some alumina production capacity is facing a forced shutdown. Xinfa Chemical Industry (3.4 million tons), Xing'an Chemical Industry (2.8 million tons) and Jinzhong Hope (3 million tons) are also reducing alumina production in order to reduce red mud emissions. Overall, the affected production capacity figures are on the high side, alumina quotations are up, the water is generally increased by 125 to 200 yuan, and the intended offer and transaction are more than 2900 yuan per ton.
The profit of 19Q2 electrolytic aluminum enterprise is expected to increase significantly compared with the previous month.
Recently, aluminum prices have risen slowly, and corporate profits have improved. According to our calculation, the average profit of electrolytic aluminum industry has recovered from a loss of more than 900 yuan / ton at the beginning of the year to nearly 200 yuan / ton in mid-May. Since the beginning of the second quarter, the industry has made an average profit of 20 yuan per ton of aluminum, and its profitability has greatly improved compared with the average loss of 530 yuan per ton of Q1. We expect the Q2 performance of the aluminum plate company to be significantly thicker than the previous month. Some investors are worried that improved profits may lead to faster production of new capacity, but on the one hand, there is an interval of nearly two months between the production of the aluminum plant and the actual contribution of output. In addition, the new production capacity of a large number of capacity replacement this year will only be completed in the second half of this year, and it will have the conditions for production, and some of the production capacity will also be limited by external factors such as power negotiations, and the production will be slow (such as Chinalco China Resources). Therefore, we believe that the price of aluminum will remain high in the short term.
Judging that the demand for the whole year is strong, the profitability of the industry will be better than that of last year.
According to Shanghai Steel Union, since the beginning of March, China's electrolytic aluminum inventory has dropped by about 360000 tons, faster than in previous years. We believe that the main reason is the low growth rate of electrolytic aluminum production and strong demand. According to the National Bureau of Statistics, the area of housing construction increased by 8.8 percent in the first four months compared with the same period last year, the cumulative amount of loans and self-raised funds of real estate enterprises rebounded to 3.7 percent and 5.3 percent, respectively, and real estate enterprises were more willing to complete their houses. In the short and medium term, demand in the mainland sector remains resilient. In terms of electricity and automobile, due to the slow progress of investment and construction of the national network in the first four months, the introduction of automobile consumption policy and other factors, consumption is expected to strengthen in the second half of the year. Overall, demand in the aluminium industry this year will be stronger than last year, while most of the new capacity on the supply side lacks absolute cost advantage, supply growth may lag behind changes in demand, and the industry is more likely to be profitable than last year.