Since the second quarter of this year, as electrolytic aluminum in Yunnan has gradually entered the stage of resumption of production, the pressure on the supply side has increased, and the downstream is in the traditional off-season of demand, and the supply and demand pattern of the aluminum market has turned from tight balance to loose.
"Because Yunnan is in the dry period in the early period, the supply of hydropower is insufficient, resulting in new capacity in the region is difficult to put in, and the total operating capacity has declined." In the latter part of the second quarter, as the rainy season approached, the operating capacity was improved, but the pace of resumption was still slow." Wang Yanhong, head of the non-ferrous metals group of Mei Erya Futures Industry Research Center, said that on the demand side, the domestic economy is in a weak recovery state, aluminum rods and aluminum stocks are high, and terminal consumption is not smooth, which also leads to the accumulation of finished goods inventories, but the consumption off-season is coming, and this weak demand state is difficult to improve in the short term.
According to Wang Chenxi and Chen Yi, non-ferrous metal analysts of Guohai Liangshi Futures, with the resumption of electrolytic aluminum production in Yunnan, electrolytic aluminum production will increase by 2%-3% year on year.
"From the supply side, the environment of water shortage in southwest China has been significantly improved, the largest variable Yunnan region has entered the process of resumption of production, the current production profit of close to 2600 yuan/ton high also determines that the aluminum plant will not take the initiative to reduce production, supply growth is more certain." From the demand side, the completion of real estate is still at a high level, but there is a decline in the quarter, the release of the favorable policy of 'protection of the building' gradually faded, and the automobile has also released some demand in advance in the price reduction tide at the beginning of the year, and it is currently entering the off-season, although it is expected that consumption can usher in the seasonal repair of 'gold nine silver ten', but there will be no super seasonal performance." Wang Chenxi, Chen Yi said.
"Overall, the domestic aluminum market is in a pattern of weak supply and demand. On the one hand, since late June, the reduced production of electrolytic aluminum in Yunnan has gradually entered the production stage, and it is expected that by the end of August, the production capacity of electrolytic aluminum will be about 1.3 million tons, and the operating capacity of electrolytic aluminum in Yunnan Province will be restored to about 4.6 million tons. On the other hand, downstream demand is in the traditional off-season, as of the end of June, the weekly operating rate of leading aluminum downstream processing enterprises fell to 63.8%, 2.7 percentage points lower than the same period last year, the off-season atmosphere under the enterprise orders are not optimistic." Central Plains futures industry metals group head Liu Peiyang said.
However, the futures Daily reporter noted that the current social inventory of aluminum ingots continues to go away and has been at a historic low. As of July 3, the social inventory of aluminum ingots was 506,000 tons, a decrease of 16,000 tons from last Thursday. "This is mainly caused by the increase in the ratio of aluminum to water in the aluminum plant and the decrease in the ingot volume. Because the southwest region had stopped production before, the downstream had to buy aluminum ingots from the surrounding social inventory to maintain production, forming a situation where the aluminum ingots social inventory was at a low level but continued to be stored. It is expected that with the resumption of production in the southwest, the ratio of aluminum to water will decline, and the removal rate of aluminum ingots will gradually slow down." Wang Chenxi, Chen Yi analysis said.
From the perspective of inventory seasonality, Wang Yanhong said that the absolute value of aluminum ingot social inventory is on the low side, and the contraction of the supply side in the early stage and the downstream replenishment make the social circulating inventory decrease, and the downstream raw material inventory and the end finished product inventory increase.
After entering the third quarter, the supply side of the increase in variables is not large, aluminum prices will be the demand side as an anchor to fluctuate. "In the medium and long term trend, with the domestic 'double carbon' goal setting, and the resulting energy conservation and emission reduction policies, the domestic electrolytic aluminum production capacity of 45 million tons' ceiling 'has become a market consensus, the current total construction capacity reached 99%, the future internal supply side flexibility is limited." However, the demand side is more elastic, the contradiction is relatively complex, the real estate chain mainly aluminum profile consumption has been impacted, but the UHV, automotive, new energy fields are still accelerating the replacement and make up for the lack of demand, demand and demand expected changes will dominate the overall trend of aluminum prices." Wang Yanhong thinks.
In Wang Chenxi, Chen Yi view, in the current situation of high profits, failed to observe the supply side of the active production cut signs, compared with the demand side more stable, oversupply on aluminum prices continue to exert pressure, and the demand side of the expected recovery will be the key to the dominant aluminum price trend. On the one hand, the market is still looking forward to the policy factors to promote the recovery of real estate, and the increase in new construction and construction area means that there is a positive transmission to the construction end; On the other hand, there are seasonal repair expectations for "gold nine silver ten". "In the context of the superposition of double expectations, whether the aluminum price can break through the operating range upward depends on how the demand side can exert force."
Liu Peiyang also believes that how aluminum prices run in the future depends on whether the policy end can pull downstream demand. Specifically, in late July, the market will focus on policy signals released at home and whether the Federal Reserve overseas will raise interest rates again.
Recently, the relevant departments issued a notice on the "Benchmark level and benchmark level of energy efficiency in Industrial Key Areas (2023 version)" to further expand the scope of energy saving and carbon reduction transformation and upgrading in industrial key areas. According to the reporter, the electrolytic aluminum industry due to the characteristics of high energy consumption, has been the key industry of energy saving and carbon reduction, which has been reflected in the relevant notice.
Wang Yanhong said that the release of the notice will make the "ceiling" of electrolytic aluminum production capacity strengthen again, and the approval of new production capacity is stricter, smelting capacity of north aluminum to the south, and the general direction of hydropower aluminum replacement has not changed. The short-term impact on aluminum prices is limited, and it is still necessary to pay attention to the impact of energy consumption target control policies on phased supply in the medium and long term.
Talking about the impact of the notice on the electrolytic aluminum industry, Liu Peiyang believes that one is to improve the industry access threshold and accelerate the withdrawal of inefficient production capacity; Second, the proportion of power generation relying on thermal power will decline, while the proportion of power generation relying on renewable energy will increase; Third, the proportion of recycled aluminum production is expected to increase; Fourth, low-carbon aluminum will be recognized by the market, and enterprises are expected to launch more low-carbon aluminum brands.
"Electrolytic aluminum has always been a high-pollution and energy-consuming industry, and since the setting of the capacity cap, electrolytic aluminum production capacity has entered an era of only replacement and no new addition." The further expansion of the scope of energy saving and carbon reduction transformation and upgrading in key industrial areas also covers electrolytic aluminum, which means that the development of hydropower aluminum, clean aluminum, and green aluminum has been given a 'shot in the heart', and the first reflection is the change of the main producing areas. First, at present, in Shandong, Xinjiang, Inner Mongolia and other northern regions are still using traditional thermal power to produce electrolytic aluminum, with the continuous implementation of policies, will gradually move to the southwest of the use of hydropower areas, from the root to solve the problem of high carbon emissions. The second is to upgrade technology in the industry, promote the development of low-carbon smelting technology, reduce power consumption, accelerate the elimination of disorderly and backward production capacity, and promote industrial upgrading. However, in this process, due to the capacity replacement, technical transformation take some time, short-term supply or decline, the formation of supply shortage situation. In the long term, hydropower and low power consumption will bring about a decline in the cost side, and the aluminum price center may move down." Wang Chenxi, Chen Yi said.
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