SMM News: in April 2020, the climate index of China's aluminum smelting industry was 17.8, down 1.2 points from the previous month; the leading composite index was 50.1, the same as the previous month. The monitoring results of the model show that in April, the industrial climate index continued to decline to the "cold" range, and the composite index initially stopped falling, and the downward pressure eased to some extent.
The climate index continues to fall to the lower edge of the "cold" range.
In April 2020, the climate index of China's aluminum smelting industry fell 1.2 points from the previous month to 17.8, which is already in the lower part of the "cold" range.
As can be seen from the prosperity signal light of China's aluminum smelting industry, in April 2020, among the 10 indicators that make up the industry climate index, seven indicators, such as LME aluminum settlement price, total aluminum smelting investment, commercial housing sales area, power generation, alumina output, main business income and total aluminum export volume, continue to be in the "cold" range; M2, electrolytic aluminum output and total profits are in the "normal" range.
The trend of the leading composite index shows all the relief of downward pressure in the industry.
The leading composite index of China's aluminum smelting industry showed an overall downward trend in the past year, and stopped falling for the first time in April 2020, unchanged from the previous month to 50.1. The composite index curve of China's aluminum smelting industry is shown in the chart below. After quarterly adjustment, the five indicators that make up the leading composite index increased by 2% and 3% compared with the previous quarter, of which the settlement price of LME aluminum and M2 increased by 4.3% and 0.9% respectively, while the total investment in aluminum smelting, the sales area of commercial housing and electricity generation decreased by 0.9%, 2.6% and 1.1%, respectively. Compared with the same period last year, M2 increased by 9.3%. The settlement price of LME aluminum, the total investment in aluminum smelting, the sales area of commercial housing and electricity generation decreased by 15.4%, 26.9%, 16.0% and 1.6%, respectively. In April 2020, domestic and foreign aluminum prices were strong inside and outside, and futures contracts rose 0.3 from the previous month to 8.0. Among them, the international aluminum price affected by the continuous fermentation of the epidemic, downstream consumption decline and other factors, fell sharply, the lowest price of the main contract of LME futures fell to 1455 US dollars / ton, a new low in nearly 4 years.
Analysis on the Operation characteristics and situation of the Industry
The negative effects of the global new crown pneumonia epidemic on the economy and the aluminum smelting industry continue, domestic production, logistics, trade and other links have basically returned to normal, downstream demand has also improved, and the overall impact on the aluminum smelting industry has been weakened. however, in foreign countries, especially the depth and duration of the impact of the epidemic on the downstream aluminum consumption industry is still facing great uncertainty. The operation of the domestic aluminum smelting industry in April 2020 shows the following characteristics:
First, production is generally stable and investment has dropped sharply. The overall operation of electrolytic aluminum production remained stable, the operating capacity decreased, and the output decreased slightly; alumina production was affected by bauxite supply. After seasonal adjustment, the daily output of electrolytic aluminum and alumina in March was 96000 tons and 182000 tons respectively, down 6.1% and 7.4% respectively from the previous month. Affected by the epidemic, coupled with the continuous progress of supply-side structural reform, the aluminum smelting industry has become more rational, with fixed asset investment falling 47.7% in the first three months compared with the same period last year.
Second, domestic demand has improved and exports have fallen from the previous month. In terms of domestic demand, in the first four months of 2020, the land purchase area and new housing construction area of real estate development enterprises decreased by 12.0% and 18.4% respectively compared with the same period last year, narrowing by 10.6% and 8.8% respectively compared with the previous three months, and the housing construction area increased by 2.5% compared with the same period last year. In the first four months, automobile production and sales fell by 33.4% and 31.1% respectively from the same period last year, narrowing by 11.8% and 11.3% respectively compared with the previous three months, with production and sales increasing by 46.6% and 43.5% respectively in April. In the first three months, investment in the completion of power grid projects across the country fell 27.4% year-on-year, 16.1 percentage points lower than in the previous two months. Benefiting from the improvement in demand in key areas of aluminum consumption, such as construction, transportation, and electric power, especially the significant recovery growth momentum of construction profile consumption, aluminum production in April 2020 was 5.28 million tons, an increase of 33.7 percent from 3.95 million tons in the same period last year. On the export side, in view of the fact that most overseas countries have implemented measures such as production suspension and closure since late March, exports of unwrought aluminum and aluminum products fell 15 per cent month-on-month to 440000 tons in April 2020.
Third, the excess pressure in the market has been alleviated, the effect of inventory removal is obvious, and the efficiency of the industry has improved. Under the background of steady decline in production and recovery in consumption, at the end of April 2020, aluminum society and in-plant inventory dropped to about 1.5 million tons from a record high of more than 2 million tons at the end of March, a drop of more than 500000 tons. The closing price of the main contract of Shanghai Aluminum rose 10.5% month-on-month to 12760 yuan / ton. The operation of the electrolytic aluminum industry has improved, and some enterprises have turned losses into profits. In April, the domestic spot price of alumina fell 15.1% month-on-month to 2150 yuan / tonne. Although the cost of raw and auxiliary materials such as bauxite has also dropped, the alumina industry is still in a state of massive losses. In the first three months of 2020, the aluminium smelting industry made a profit of 1.46 billion yuan and a sales profit margin of 1.1 per cent. The overall profitability of the industry is expected to improve in April.
Although the current global economic development is facing unprecedented challenges, given that China's aluminum consumption is mainly based on the domestic market, and as the domestic economy gradually recovers, the demand for aluminum in the manufacturing market is expected to continue to pick up in the coming months. However, under the adverse impact of the spread of the global epidemic, coupled with the rise of trade protectionism in various countries and other factors, the export pressure of China's aluminum products is still great.
To sum up, it is initially expected that the aluminum smelting industry will continue to be in a "cold" range for a period of time in the future.
Click to register: "2020 (15th) China International Aluminum processing Summit"
Scan the QR code, apply for participation or join the SMM metal exchange group