[SMM Analysis] the amount of electricity investment in May is still down from the same period last year. What is the consumption of aluminum cables in the end?

SMM6 25-month news: yesterday the Energy Bureau released the national power industry statistics for January-May, the completion of power grid project investment (January-May cumulative) 115.7 billion yuan, down 18% from the same period last year, May monthly completion amount of 35.4 billion yuan, down 16%; new 220kV and above transmission line length (January-May cumulative) 10721 km, a year-on-year decrease of 24%, May monthly new length of 2754 km, a year-on-year decrease of 45%.

The completion of power grid investment has been in negative growth from January to May 2019.

Data source: energy Bureau SMM

Negative growth in the length of new transmission lines of 220 kV and above from January to May 2019

Data source: energy Bureau SMM

According to the SMM survey, the operating rate of aluminum cable enterprises in the first four months of this year is indeed worse than in previous years. However, there are a large number of UHV bidding in the first quarter of this year, most enterprises reflect that the order in 2019 is better than 2018, and the annual output is expected to have an increase of about 15%, and that the actual delivery time of UHV is expected to be from July to September this year, while the intensive production schedule is concentrated in June, so it is normal that there is no production in the first few months. In addition, the completion of power grid investment includes the amount of copper-aluminum cable investment, and also includes maintenance, engineering and other costs, so it can not directly reflect the demand for aluminum in the cable industry.

Comparison of operating rate of Aluminum Cable Enterprises over the years

Source: SMM

From another point of view, the processing fee for aluminum rod also reflects the consumption of aluminum in the power industry from the side: since the Spring Festival in 2019, the processing fee for aluminum rod has risen three times, and the third time, that is, the national average price has risen by about 160 yuan / ton since the beginning of June, compared with the two highs in April and May 2018, while the price of aluminum rod has been declining in June, directly reflecting the difference between this year's power grid project and last year's process. It also explains to a certain extent the negative growth of power grid investment and the length of new transmission lines of 220 kV and above in the first five months compared with the same period last year.

The increase in aluminum rod processing fees after the Spring Festival in 2019 is later than that in 2018.

Source: SMM

To sum up, the author believes that the aluminum peak of the aluminum cable industry this year is later than 2018, so the first five months of the data is not optimistic, but the June data is expected to improve significantly.

(SMM Shanghai Nonferrous net Liang Xuan 021 5166 6922)