The policy forced production cuts vs. high profits to drive the increase and resumption of production. In 2021, the domestic electrolytic aluminum operating capacity has turned negative year-on-year from the end of the third quarter. Due to the dual control of energy consumption and power shortages, electrolytic aluminum companies in many regions have experienced production reductions in 2021. ,
According to the SMM survey, as of late September 2021, China has reduced production or has clearly requested that the annual production capacity of electrolytic aluminum be reduced by 2.86 million tons per year. The provinces involved include Yunnan, Inner Mongolia, Guangxi, Xinjiang, Henan, and Guizhou, as well as Qinghai and Ningxia. There are also rumors of production cuts in provinces such as Shaanxi and Shaanxi. It is expected that the reduced production area during the year may still be expanded. According to SMM's survey of various companies, it is estimated that the new production capacity is expected to be 930,000 tons in 2021, and the new production capacity is expected to be 5.223 million tons in 2022 and long-term.
Beginning in September 2021, China's electrolytic aluminum operating capacity has turned negative year on year. According to the operating rate trend, it can be seen that the domestic electrolytic aluminum operating rate has also been declining since the second quarter.
The long-term impact of "carbon neutrality" on the electrolytic aluminum industry Carbon neutrality has 7 major effects on the electrolytic aluminum industry:
1. In terms of capacity quotas, with the increase in "carbon neutrality" efforts, capacity restrictions are getting bigger and bigger. Especially for the newly added self-supplied electricity and the aluminum production capacity using thermal power, the difficulty of approval is even higher;
2. In terms of production capacity relocation, in response to the "carbon neutral" policy, some of the domestic electrolytic aluminum production capacity may be relocated overseas in the long term;
3. In terms of energy structure switching, speed up energy replacement, such as the use of solar and wind power to replace thermal power. In addition, carbon neutrality has also allowed the electrolytic aluminum industry to accelerate the replacement of renewable resources, and the use of recycled aluminum such as scrap aluminum can be accelerated; many companies have begun to transfer their production capacity to areas with abundant water resources like Yunnan, and the distribution of production capacity has been rearranged; Moreover, in view of the increase in carbon emissions trading costs or related tax costs in the future, the hidden costs have increased, and the cost of electrolytic aluminum has risen;
4. In terms of consumption, new consumption trends are formed. For example, green energy aluminum products based on renewable energies such as hydropower and solar energy are more favored by the consumer market. It is reported that the state will start to sell aluminum reserves in the second half of 2021. At present, 210,000 tons of aluminum ingots have been dumped, and a total of about 350,000 tons are expected to be released throughout the year; and entering 2021, the import window It has been opened from time to time, and it is estimated that the net import of primary aluminum for the year will reach 1.6 million tons. Both the dumping of reserves and the import of primary aluminum have supplemented aluminum stocks to a certain extent, and this situation may become normal in the future. Power curtailment + environmental protection + high volatility aluminum prices, the recovery of downstream consumption in the peak season in September is less than expected The production and start-up of enterprises are even more affected. In addition, in the context of the peak season in September, the recovery of downstream consumption was not as good as expected. The export of aluminum products and products has become the highlight of consumption this year. The performance of domestic demand is generally based on SMM surveys. Since the second half of 2020, the performance of China's aluminum and aluminum products export market has slowly recovered. Among them, the growth rate of aluminum products exports was faster than that of aluminum products. The export profit of aluminum foil has gradually returned to the level before the epidemic. Pay attention to the change in the proportion of aluminum water and the rigid downstream demand in the fourth quarter. It is estimated that in 2021, only a small amount of about 100,000 tons will be accumulated. According to SMM data, the domestic electrolytic aluminum has shown an overall de-stocking trend since April, and the electrolytic aluminum inventory has been at a low level. Inventories have increased slightly since the beginning of the month.
The inventory of aluminum rods has continued to accumulate since May. On the whole, SMM predicts that the entire year of 2021 is expected to accumulate only a small amount of about 100,000 tons. In the future, we need to continue to pay attention to the aluminum-to-water ratio in the fourth quarter and changes in downstream rigid demand. The prices of thermal coal, alumina and related auxiliary materials have risen to vary degrees, focusing on electricity prices. Electricity, auxiliary materials and alumina prices have all risen to vary degrees. According to SMM surveys, entering 2021, the prices of pre-baked anodes and alumina There are different degrees of uplift. Among them, alumina is a non-listed product, and its "price discovery" is only completed by the industrial chain. A tight balance basis + emotional guidance will cause the spot price to rise and fall sharply.
SMM predicts that due to the rise in coal prices and the shift in power policies, for example, the "Notice of the National Development and Reform Commission on Improving the Tiered Electricity Price Policy for the Electrolytic Aluminum Industry" mentions that the stepped electricity price will be set, steadily adjusted, and the introduction of electricity price concessions is strictly prohibited. Factors such as policies (which have been canceled in Yunnan Province) and strengthening the management of self-supplied power plants indicate that the cost of electricity will rise in the future. The low inventory gives strong support to the price of electrolytic aluminum. Focus on the impact of macroeconomics and power cuts on the entire industry chain. Aluminum is a product with strong fundamental pricing. The current low inventory gives strong support to the price of electrolytic aluminum. SMM predicts that tight supply and demand will be weak. It will be more prominent in the fourth quarter of 2021, and follow-up needs to continue to pay attention to the impact of power rationing on the entire industry chain.
With the power curtailment policy, MINDWELL reminds our customers that those who need aluminum die casting parts need to hurry to place an order, so as not to affect the delivery time.