Aluminum prices will rise first and then decline in 2022

In 2022, alumina production capacity will continue to expand, electrolytic aluminum production capacity will gradually recover, and aluminum prices will rise first and then decline. The price range of Lun aluminum is 2340 US dollars per ton, while the price range of Shanghai aluminum is 17500 Mel 24800 yuan per ton.

Shanghai aluminum rose 31.82% in 2021, and its trend can be roughly divided into two stages: from the beginning of the year to mid-October, aluminum prices continued to rise under the influence of overseas economic repair, increased exports, double control of energy consumption and skyrocketing overseas natural gas prices; from late October, domestic intervention in coal prices, cost support logic collapsed, aluminum prices fell sharply, and began to rebound at the end of the year under the influence of soaring energy prices in Europe.

Alumina production capacity continues to expand

The degree of external dependence of bauxite in China is as high as 65%, mainly from Guinea, Australia and Indonesia. The coup d'é tat in Guinea in 2021 did not affect bauxite exports, and the Indonesian government has repeatedly mentioned banning bauxite exports, which is expected to have little impact if implemented, which can be made up for by imports from other countries. However, because of our high dependence on bauxite and high concentration of imports, we need to pay close attention to the risks brought by overseas political instability.

From January to November in 2021, global alumina production totaled 127 million tons, an increase of 4.3 percent over the same period last year, of which China's alumina production was 69.01 million tons, an increase of 6.5 percent over the same period last year. There are many alumina projects to be put into production at home and abroad in 2022, mainly in Indonesia. In addition, the Jamalco alumina plant with an annual capacity of 1.42 million tons is expected to restart in 2022.

As of December 2021, China's alumina production capacity of 89.54 million tons, operating capacity of 72.25 million tons, is expected to increase production capacity of 7.3 million tons in 2022, resumption capacity is conservatively estimated at 2 million tons.

On the whole, the global alumina capacity is in a state of excess.

In 2021, the production capacity of electrolytic aluminum in China is limited under the influence of power limit and double control of energy consumption. By November 2021, the total production capacity of electrolytic aluminum in China was 42.83 million tons, with a production capacity of 37.57 million tons and a capacity utilization rate of 87.7 percent. From January to November 2021, domestic electrolytic aluminum output totaled 35.45 million tons, an increase of 5.7 percent over the same period last year.

The domestic production capacity of electrolytic aluminum will be reduced by about 3.89 million tons in 2021 due to double control of electricity and energy consumption. it is estimated that the production capacity will resume to 2.38 million tons in 2022 and the new production capacity will be 2.52 million tons.

From January to November 2021, overseas electrolytic aluminum production totaled 25.99 million tons, an increase of 1.57 percent over the same period last year. Affected by the energy crisis, by the end of December last year, European aluminum plants had reduced production by more than 700,000 tons. However, due to the increase in profits in 2021, overseas production capacity has also increased, and overseas electrolytic aluminum production capacity is expected to increase to 1.51 million tons in 2022.

Traditional consumption slows down? Increased demand for new energy

The decline in the growth rate of domestic real estate and power investment in 2021 is a drag on the traditional consumption of aluminum. From January to November 2021, the cumulative year-on-year growth rate of domestic Electroweb infrastructure investment fell to 4.1%, and the cumulative growth rate of national real estate development investment dropped to 6%. Based on the fact that the direction of domestic real estate regulation and control remains unchanged in 2022, the growth rate of real estate consumption is still facing downward pressure.

With the lightweight and electrification of cars, the amount of aluminum used by cars increases. It is estimated that the amount of aluminum used by each new energy vehicle is about 85 kg more than that of traditional vehicles.

Data show that from January to November 2021, domestic aluminum used for cars was 2.824 million tons, an increase of 5.3 percent over the same period last year. Aluminum used for new energy vehicles was 430000 tons, accounting for 15.2 percent of the aluminum used for cars, an increase of 9 percent over 2020. It is estimated that in 2022, the increase of primary aluminum consumption by traditional cars will be about 130000 tons, and that of new energy vehicles will be about 160000 tons.

In terms of photovoltaic, the newly installed capacity of photovoltaic in China from January to November 2021 was 34.8 GW, an increase of 34.5% over the same period last year. The new installed capacity of photovoltaic for the whole year of 2021 is expected to be 40GW. According to the forecast of CPIA, the global photovoltaic installed capacity is 180-225GW in 2022, the domestic photovoltaic installed capacity is 60-75GW, and the additional aluminum consumption is about 1.01 million tons.

Market Prospect in 2022

In 2022, the Fed is expected to raise interest rates, and metal prices will come under pressure as a whole. With the advance of domestic fiscal policy and the increase of infrastructure investment in the first half of the year, the demand for aluminum will improve. Due to the lack of relaxation in the regulation of real estate, we can focus on the demand for aluminum in new energy vehicles and photovoltaic industry. The supply side pays attention to the output of electrolytic aluminum. Under the background of "double carbon", the domestic production capacity of electrolytic aluminum may continue to be limited, but it is expected to be better than 2021. In foreign countries, the estimate of increasing and resuming production in 2022 is also considerable.

On the whole, the gap between supply and demand of electrolytic aluminum will narrow in 2022, tighten in the first half of the year, improve in the second half of the year, and aluminum prices will rise first and then suppress. The price range of Lun aluminum is 2340 US dollars per ton, while the price range of Shanghai aluminum is 17500 Mel 24800 yuan per ton.