According to alighting’s statistics, China’s total output capacity of electrolytic aluminum in September was 42.461 million tons, with a production capacity of 38.516 million tons and an operating rate of 90.71%.In terms of output, according to SMM statistics, the output of electrolytic aluminum in October was 3.249 million tons, up 4.34 percent year on year.
After the supply-side reform in 2017, the ceiling of total aluminum output nationwide was formed.Tianfeng Securities research report analysis shows that the cumulative reduction/cessation/conversion of electrolytic aluminum production capacity in 2018-2019 exceeds 4.3 million tons.Among them, the reduction and suspension of 2019 domestic electrolytic aluminum production involves or exceeds 2.4 million tons, mainly due to high cost (electricity price) capacity conversion, flexible production and accidents.In addition to the impact of the epidemic in the early part of 2020, the overall production capacity was reduced by less than 1 million tons.
Mr. Cheng also said in an interview that while current domestic inventories of aluminum aren’t particularly low, they are still much lower than their historical highs.As of November 16, domestic electrolytic aluminum inventory of 617,000 tons, the previous peak inventory more than one million tons, normal year inventory is also at the level of 7.8 million tons.
“Recently, aluminum prices are high, but inventories are falling and manufacturers’ inventories are also very low, which shows that the market is indeed tight supply, not artificial manipulation.”Wu Kai, head of a downstream aluminum foil and other aluminum products processing enterprise in Shanghai, also said that under the current price, there is no need for aluminum factories to store inventory, and the downstream do not dare to store it. In this case, the inventory can be reduced, which only shows that the market demand is really good.
But analysts also expressed concern about high prices and low inventories in the current market.
Zheng Chunlei believes that the early market is generally bullish, the delivery of goods to reduce, the market supply is tight, the price of aluminum up to generate a certain boost.However, on the supply side, imported goods continue to enter the country, the trend of domestic manufacturers releasing capacity will not change, the overall domestic supply will not change, the supply side of aluminum prices to form a certain negative.
Cheng Xiaoyong said that social inventory data do not see the real inventory.In a liquid market environment, inventories can be hidden elsewhere.When things go bad and money tightens, stocks suddenly grow.
“To see whether the price of aluminum is high, it depends on the profit of tons of aluminum.The threshold of electrolytic aluminum entering the industry is very low.Now, due to environmental factors, indicators and environmental protection equipment are required, but loss-making enterprises can sell the indicators, so there is still room for capacity growth.It is rare for traditional industries to achieve such a high profit margin. The current winter has environmental constraints on production, and production capacity growth will be faster next spring.But given the overall macro environment, we won’t be bearish on aluminum for the time being, but it’s not appropriate to continue to be bullish.”He said.
Upstream and downstream profit weakness under aluminum high prices to meet the challenge
The high price and high profit of electrolytic aluminum did not boost the profit of upstream and downstream products.
“The company’s products are basically sold according to the price of electrolytic aluminum plus processing fees.Electrolytic aluminum price has soared recently, if the customer groups are in the domestic, the impact may not be too big, like our domestic and foreign markets have, the recent days are more difficult.“At these spark global limited high prices, people are very cautious about stocking up.”As a direct downstream manufacturer of electrolytic aluminum, the current situation of the aluminum processing and production enterprises where Wu Kai works is not optimistic.He told the reporter of Securities Times · E Company that under the current market situation, the upstream electrolytic aluminum enterprises have sucked the profits of the downstream, while nearly half of the aluminum processing enterprises have to lose money, and the company where they work has also suffered a slight loss in the past two months.
The poor foreign demand is on the one hand, subject to the sharp decline of the exchange rate and the upside down of the foreign aluminum price, the production and operation of export-oriented aluminum processing enterprises are significantly affected.
Aluminum processing has hysteresis, aluminum foil from the raw materials, to the processing sold, the average to about two months.Take Wukai Company as an example. Many current orders were signed last year. During the pricing process at that time, the estimated aluminum price for this year was around RMB 14,000 / ton.
“Bauxite, alumina prices have not gone up, processing companies are running with the hall.The price rise of electrolytic aluminum has no obvious positive impact on the price rise of aluminum foil and aluminum processing products, but increases the risk.”Wu Kai said that the current high prices of aluminum, downstream enterprises have been afraid to purchase.When aluminum was cheap, it could replace many other products.Aluminium prices are too high and many alternative markets have been suspended.In the context of high costs, aluminium demand is bound to have an impact.
Upstream carbon products, which benefited from rising aluminum prices in 2017, are only modestly profitable.