Non-ferrous: the increase in Electroweb investment will boost consumption [institutional reviews]

Recently, at the 2022 annual work conference held by Electroweb, the country's Electroweb announced a total investment target of 579.5 billion yuan in 2022, of which Electroweb plans to invest 501.2 billion yuan. Reviewing the investment situation of Electroweb in recent years, if you add Southern Network and other Electroweb investment, Electroweb investment is expected to reach 600 billion this year.

According to the Electroweb construction plans of National Electroweb, Southern Electroweb and Inner Mongolia Electroweb, it is estimated that during the 14th five-year Plan period, the cumulative investment of State Electroweb and Southern Electroweb will exceed 3 trillion yuan. If you include the investment of regional Electroweb companies, the total investment of Electroweb in the country may exceed 3 trillion yuan.

1. An Analysis of the intensity of Electroweb Investment

1.1 Electroweb invests in the 14th five-year Plan

Prior to this, China has experienced a round of Electroweb highway construction period, the approximate time is to start planning in 2006, large-scale construction began in 2010, and basically completed in 2017. According to the recently released data, the total investment of Electroweb during the 14th five-year Plan period will be significantly higher than that of 2.57 trillion yuan during the 13th five-year Plan period, an increase of 16.7 percent, and higher than that of 2 trillion yuan during the 12th five-year Plan period, an increase of about 50 percent. Measured by annual split, Electroweb investment (including Southern Network and local Electroweb) is expected to reach 600 billion / year during the 14th five-year Plan period, with an average annual growth rate of 14.8 percent, higher than 522.4 billion / year of the 13th five-year Plan and 417.6 billion / year of the 12th five-year Plan.

1.2 the intensity of ultra-high pressure investment has been significantly increased.

UHV investment increased rapidly in 15-18 years and declined after 2018. Overall, the total amount of UHV investment in China over the years is about 800 ~ 140 billion, accounting for about 140.3% of the total Electroweb investment in China. The ultra-high voltage investment of State Network may reach 380 billion yuan during the 14th five-year Plan period, which is expected to become an important structural increment of Electroweb investment. If we add in the follow-up investment of the started but uncompleted lines in 2021, it is estimated that the total UHV investment this year is expected to be between 84 billion and 180 billion, and the actual investment is expected to reach near the upper edge of the range.

2.1 increase in UHV planned start-up lines

According to the latest data released by the National Electroweb, during the 14th five-year Plan period, the National Electroweb plans to build "24 deliveries and 14 direct" UHV projects, involving more than 30, 000 kilometers of lines, with a total investment of 380 billion yuan.

Among them, Electroweb plans to start construction of 13 UHV lines in 2022. This means that UHV Electroweb will usher in a new round of construction peak.

Compared with previous years, the number of UHV approved planned lines this year is 13, an increase of nearly 85% from the highest seven in previous years. From the perspective of the increment of the length of high-voltage lines in China, the increase of UHV lines approved by Electroweb in 2022 is expected to significantly increase the length of new lines. From the point of view of the amount of UHV investment, there is little difference between DC and AC investment, and the main difference is in the length of the line. According to the planned line length, if the line length is increased by 50% in 2021 (construction will take a 2-year cycle), the new line length in China is expected to reach 42900 km in 2022, the fastest growth rate in nearly a decade.

two。 The influence of Electroweb Investment on Copper and Aluminum consumption

According to the investment scale of Electroweb in the 14th five-year Plan and the comparative calculation in the 13th five-year Plan, the total aluminum demand for aluminum conductors during the 14th five-year Plan period is about 18.38 million tons, an increase of 1.9 million tons over the 16.48 million tons in the 13th five-year Plan, with an average annual increment of 380000 tons.

In the UHV field, due to the construction of only five lines in 2021, the amount of aluminum used is lower than the average level. The number of lines expected to start in 2022 is expected to reach 11,13, doubling the amount of aluminum used in 2021. Affected by the factors behind the line construction, the amount of aluminum used for UHV lines is expected to increase by 60-800000 tons in 2022.

Copper is mainly used in distribution networks and line equipment. According to the calculation of the copper consumption of the distribution network, it is estimated that the total copper consumption of the distribution network will increase by 1.9 million tons during the 14th five-year Plan period, with an annual average of 380000 tons. Copper used for Electroweb transmission equipment has increased by 450000 tons, with an annual average of 90, 000 tons, with a total increase of 470000 tons per year during the 14th five-year Plan period. If the investment is in front, it is expected that the amount of copper used will also increase.

In 2022, Electroweb investment is expected to increase copper consumption by 47-600000 tons and aluminum consumption by 60-800000 tons. If the growth rate of investment is lower than expected, the increment of copper and aluminum consumption is expected to remain in the low range of 470000 tons and 600000 tons. It is estimated that Electroweb investment will boost China's copper consumption by 3.3% and aluminum consumption by 1.7% in 2022.

3. A Review of the impact of the increase in Electroweb Investment on the Price of Copper and Aluminum in previous years

3.1 Review of the years of increase in Electroweb investment in China

China's Electroweb investment is the largest in 2016, 2017 and 2018, and more than 500 billion. The scale of investment has declined after 2019, to less than 500 billion. Electroweb invested 495.1 billion yuan in 2021, up slightly from 469.9 billion in 2020.

At the same time, from the point of view of the new line length, the increase in 2016, 2017 and 2018 is more obvious. However, the length of new lines in 2021 is the least in nearly five years, which is lower than the average level in the past five years, and some lagging lines in 2021 are expected to start construction in 2022.

3.2 the influence of Electroweb investment on the price of copper and aluminum

Historically, investment in Electroweb in 2015, 2016, 2017 and 2018 was 464 billion, 543.1 billion, 533.9 billion and 564.1 billion respectively, with year-on-year growth rates of 12.64%, 17.06%,-1.7% and 5.66% respectively. Copper and aluminum prices bottomed out in 2016 after Electroweb investment intensified. According to historical statistics, every percentage point increase in Electroweb investment will drive copper prices up 0.7 per cent and aluminium prices 3.9 per cent.

4. Summary of the impact of Electroweb's investment in the 14th five-year Plan on the copper and aluminum market.

4.1 the growth rate of Electroweb investment accelerated

After nearly three years of low investment, Electroweb investment is expected to grow faster in 2022. Among them, the construction of UHV lines, as a necessary infrastructure for long-distance power transmission in China, has become an indispensable existence of power dispatching. UHV construction significantly optimizes the consumption of new energy, making full use of clean energy in the west and reducing the phenomenon of abandoning light and wind. According to the data disclosed by the national network, the installation of new energy in China has been showing a trend of stable and rapid growth, which needs UHV lines to assist in improving the efficiency of new energy utilization.

4.2 seasonal characteristics of Electroweb construction

China's Electroweb investment and construction are seasonally significant, and investment and line construction increased significantly in the second and fourth quarters. Therefore, it is expected that the construction of Electroweb will be intensified and the metal consumption will increase in April-June and October-December.

4.3 the influence of Electroweb Investment on the Price of Copper and Aluminum

It is estimated that during the 14th five-year Plan period, Electroweb investment will increase copper consumption by an average of 3.3% annually, and aluminum consumption will grow by 1.7%. It is estimated that copper prices will rise by about 2.1%, and aluminum prices will rise by about 6.63%.