Focus of the week
Last week, the National Development and Reform Commission issued the “Barometer of Completion of Energy Consumption Dual Control Targets in Various Regions in the First Half of 2021″. The energy consumption intensity of 9 provinces (regions) in Qinghai, Ningxia, Guangxi, Guangdong, Fujian, Xinjiang, Yunnan, Shaanxi, and Jiangsu was rising instead of falling compared with the same period last year. The reduction rate of energy intensity in 10 provinces has not met the progress requirements, and the national energy conservation situation is very severe. For these 9 provinces and regions, this year suspended the energy-saving review of the “two highs” projects other than the major projects planned by the state, and urged all localities to take effective measures to ensure the completion of the annual energy consumption double control target, especially the energy consumption intensity reduction target task.
Aluminum bar/rod
The dual performance of dual energy consumption control and power restriction will run throughout the year. Inner Mongolia, the first to be named in the first quarter, completed the dual energy consumption control most smoothly in the first half of the year. Therefore, the production restriction in the third quarter is relatively controllable: Mongolia The largest electrolytic aluminum plant in the east is operating as usual, and the cumulative output is basically the same as that of the same period last year. The other two small plants have slightly expanded their production restrictions. In August, they totaled about 100,000 tons. New production capacity in the province is hopeless this year.
The southwest region is stretched. Yunnan and Guangxi, the two major gathering places for new production capacity, respectively limited production of 100,000 tons and 200,000 tons in August. Even if the power supply situation improves marginally, the electricity consumption per ton of electrolytic aluminum is higher than other industrial electricity consumption. Enterprises did not dare to resume production hastily, superimposing the advent of the dry season at the end of the year and failing to meet the energy consumption standards, and the release of new production capacity was nowhere in sight.
Great Northwest, the second half of the story opens. In recent years, the five northwestern provinces—Qinghai, Ningxia, Xinjiang, Shaanxi, and Gansu—have basically no new capacity. The stock capacity totals 14.1 million tons, accounting for 32% of the national electrolytic aluminum production capacity. According to the survey, the installed capacity of clean energy (hydropower, wind power, photovoltaic) in Qinghai Province accounts for up to 90%. Thermal power units can rest during summer vacations in previous years. However, this year, the upstream of the Yellow River has low water inflow, and the amount of electricity sent out during the same period has increased significantly, even if thermal power generating units It is also difficult to maintain electricity consumption in Qinghai Province under normal operation, and the situation is very severe due to the superimposed red warning of energy efficiency dual control. At present, some electrolytic aluminum companies have received a warning notice of power curtailment from Xining of the State Grid, involving an operating capacity of about 2 million tons.
Aluminum bisc/circle
There is no news of power rationing in the other four provinces for the time being, but the energy efficiency dual control goal in the first half of the year has not been completed. Some provinces have already entered inspection teams to request rectification. If necessary, they may restrict production like Inner Mongolia in the first quarter. We assume that under the circumstances of optimism, neutrality and pessimism, the five northwestern provinces may face production restrictions of 100,000 tons, 510,000 tons, and 1.12 million tons respectively.
Operational suggestions and logic: do more on dips. The country’s expectation of stricter control of the “two highs” projects is gradually being fulfilled, and the five northwestern provinces may face the same production restriction situation as Inner Mongolia in the first quarter, and the existing production capacity will be disturbed. The southwest region is even more struggling. Under the situation of hydropower shortage and the skyrocketing cost of thermal power, it has to shelve new production capacity. During periods of severe power shortage, production will be limited. The progress of clean energy deployment is slow. If more thermal power is used, it will face The energy efficiency dual control is not up to standard, and further rectification is needed. Therefore, by the end of the year, the country’s electrolytic aluminum production capacity will most likely run around 38 million tons. With the arrival of the peak consumption season, inventory is expected to accelerate to a new low level before the end of the year. It is recommended to maintain the idea of long bargaining.
Risk reminder: 1. Deterioration of the epidemic; 2. Accelerated release of new additions and resumption of production; 3. Demand is significantly lower than expected.
Market review: Policies are frequently introduced and aluminum prices fluctuate more
Policies are promulgated frequently, aluminum prices fluctuate more and more
Last week, the National Development and Reform Commission raised the dual control of energy efficiency, and the market worried about the limited production upgrade of electrolytic aluminum plants, which stimulated Shanghai’s aluminum soaring to exceed the previous high of May, and the main contract reached a maximum of 20570 yuan/ton. However, due to macro impacts in the middle of the week, China’s July economic data was not performing well, which undermined the confidence of market bulls; then the US consumer confidence index was upset again, which aggravated investors’ worries about the slowdown in economic growth, and led to a large group of non-ferrous metals. Fell, Shanghai Aluminum finally closed at 20110 yuan/ton.
Lun Aluminum fluctuated and weakened, closing at 2555 US dollars/ton, a weekly decline of 2.14%. LME stocks continued to decline, with 0-3 litre discounts rising. After excluding the influence of exchange rate, the Shanghai-London ratio of aluminum is around 1.207, and the import window is slightly opened.
Electrolytic aluminum smelting and import profits both increase
In anticipation of tight supply, high profits need to be given to stimulate production
Recently, the prices of alumina and pre-baked anodes have risen simultaneously. The cost of some electrolytic aluminum plants that use thermal power even exceeds 16,000 yuan/ton, and their profits have been significantly squeezed. However, Yunnan still maintains this year’s hydropower prices, and electricity costs are relatively advantageous.
The market expects that power curtailment and dual control of energy efficiency will continue to cause the supply of electrolytic aluminum to continue to be tight. Therefore, it is necessary to give the electrolytic aluminum plant huge profits to stimulate production. With the rise in aluminum prices, the weighted average cash profit of electrolytic aluminum across the country increased by 300 yuan/ton to 6,300 yuan/ton.
The Shanghai-London ratio fluctuates and strengthens to the opening of the import window
In July 2021, the import of electrolytic aluminum was 179,000 tons, an increase of 13.29% from the previous month. In terms of different countries, 105,300 tons and 33,800 tons were imported from India and Russia, accounting for 59% and 19% of the total. From January to July, domestic imports totaled 921,800 tons, a cumulative year-on-year increase of 165.86%.
The Shanghai-London ratio fluctuated and strengthened, reaching 1.207, and the electrolytic aluminum import window was slightly opened. As of the week of August 14, aluminum ingot inventories in the Shanghai Free Trade Zone increased by 30,000 tons to 114,000 tons, and inventories increased for the 10th consecutive week.
The off-season is gradually coming to an end
Power rationing in processing plants improves, peak season can be expected
Last week, the weekly operating rate of leading aluminum processing enterprises increased by 0.5% to 68.6%. In terms of aluminum category, high aluminum and silicon prices have a greater impact on aluminum profiles, primary alloys and cable companies. The skyrocketing cost of raw materials has reduced the profits of processing companies. Relatively speaking, large companies have done better orders and risk prevention measures. The impact is relatively small for small and medium-sized enterprises, and aluminum cable companies have stable order schedules. The power curtailment in Henan has eased. The operating rate of aluminum sheets and strips has risen to 80%, and the operating rate of aluminum foil has remained stable. As aluminum prices rise, some aluminum foil factories have indicated that they will increase processing fees again.
To sum up, as the impact of electricity curtailment on aluminum processing gradually weakens, the weekly operating rate of aluminum is expected to gradually rise to above 70%, and the off-season is gradually coming to an end. Pay attention to the performance of the coming consumption of gold, nine, and silver.
Aluminum export performance in July is acceptable
In July 2021, unwrought aluminum and aluminum products exported 469,000 tons, and the cumulative exports from January to July were 3.085 million tons, a cumulative year-on-year increase of 12.7%. With the recovery of the overseas economy, the demand for aluminum materials has clearly strengthened, but factors such as shortage of containers and high sea freight have inhibited export orders, and frequent international trade frictions have made it difficult for exports to increase significantly. The average monthly export volume is expected to remain at 450,000 tons. s level.
Social inventory is close to the same period last year
Aluminum profiles
On August 23, the social inventory of electrolytic aluminum accumulated a small amount of 20,000 tons to 743,000 tons. There were concentrated arrivals in Gongyi area, while inventory in Wuxi and Nanhai areas continued to fall. Domestic social inventory was close to the level of the same period last year and was at a relatively low level. The current national epidemic prevention and control measures are strict, and the Xinjiang Railway has adjusted its transportation policy, resulting in uncertain delivery time. There is a backlog of aluminum ingots and aluminum rods on some platforms, and the arrival of goods in various places is expected to decline. The weekly outbound volume of aluminum ingots is acceptable, and the short-term suspension of de-stocking is expected to continue. The Shanghai Futures Exchange’s aluminum warehouse receipts fell to 85,000 tons.
Downstream fear of high, aluminum rod processing fee is sluggish
The inventory of aluminum rods has accumulated from 13,000 tons to 130,600 tons, and the processing fees are hovering at a low level. The processing fees in Wuxi and Foshan are respectively 290 and 250 yuan/ton. The base price of aluminum has risen, the overall market transaction situation is average, and the downstream remains on the sidelines.
Post time: Aug-25-2021