Abstract: 5G infrastructure, UHV, inter-city high-speed railway and rail transit, and new energy vehicles involved in the new infrastructure are important areas of aluminum consumption, and their large-scale investment construction will certainly lead to a new round of aluminum consumption growth.
In December 2018, the Central Economic work Conference proposed for the first time "new infrastructure", that is, new infrastructure construction. The meeting stressed that "it is necessary to increase the technological transformation and equipment upgrading of the manufacturing industry, speed up the pace of commercial use of 5G, strengthen the construction of new infrastructure such as artificial intelligence, industrial Internet, and Internet of things, increase investment in intercity transportation, logistics, and municipal infrastructure, and make up for the shortcomings in the construction of rural infrastructure and public service facilities. Since 2020, under the influence of the epidemic, senior officials have spoken frequently again. Pay great attention to the "new infrastructure" and point out for the first time that. "the new infrastructure mainly includes seven areas: 5G infrastructure, UHV, inter-city high-speed railway and inter-city rail transit, new energy vehicle charging piles, big data center, artificial intelligence, and industrial Internet." it can be seen that, under the background of the sharp increase in pressure in the economic stage caused by the epidemic, the intention of the government to use new infrastructure as a breakthrough to boost consumption and promote investment to stabilize economic growth is self-evident.
Aladdin (ALD) believes that 5G infrastructure, UHV, inter-city high-speed rail and rail transit, and new energy vehicles involved in the new infrastructure are important areas of aluminum consumption, and its large-scale investment and construction will certainly drive a new round of aluminum consumption growth, which is undoubtedly a major boon for the current weak downstream consumption. Combined with the nearly 50 trillion yuan of investment recently announced by various provinces (including a total planned investment of 7.6 trillion yuan in 2020), and taking into account the unit consumption of aluminum in various fields, we expect that the new infrastructure will bring an increase of nearly 969900 tons of aluminum consumption in 2020. this is still a visible increment without considering that the development of charging piles will greatly drive the consumption of new energy vehicles. If we consider the growth of new energy vehicles (and under the downward macroeconomic pressure, the government is very likely to introduce relevant policies to support the field of new energy vehicles), the marginal contribution of aluminum consumption brought by the new infrastructure is more significant.
5G construction is ready to start, and the total amount of aluminum used in base stations is limited.
2019 is known as the first year of 5G commercial, countries are competing to introduce policies to encourage 5G construction, infrastructure construction represented by 5G ushered in a period of rapid development. On December 22nd, former Minister of Industry and Information Technology Li Yizhong said: China will build 6 million 5G base stations in seven years, with a total investment of nearly 1.2 trillion to 1.5 trillion. By the end of December 2019, more than 126000 groups of 5G network roadbed stations have been opened for commercial development across the country, and by the end of 2020, we will strive to achieve 5G network coverage in all prefecture-level cities across the country, according to this calculation. The total number of base stations to be built this year will reach 65-800000. According to Aladdin (ALD) research, aluminum demand for 5G construction is mainly concentrated in base stations, accounting for about 90%, while aluminum for 5G base stations is concentrated in photovoltaic inverters, 5G antennas, 5G base station cooling materials and thermal transmission, etc., mainly made of alloy aluminum plates 3003 and 1100. according to the current aluminum ratio of 40kg/ used by mainstream equipment manufacturers, 5G base stations will consume about 28000 tons of aluminum in 2020. Considering that aluminum 3003 and 1100 aluminum alloys for base stations need to consume a certain amount of waste aluminum, 5G will most likely consume 25000 tons of aluminum.
High-speed rail and rail transit speed up again, and aluminum for transportation increases steadily.
At the beginning of 2020, the novel coronavirus epidemic continued to ferment, and the downward pressure on the global economy increased sharply. Infrastructure such as high-speed rail and rail transit, as the glue to drive social and economic development, once again stood at the forefront of the economic downturn.
According to the data of regional development and reform commissions, urban rail transit projects (subway, tram) in 12 regions were approved by the national and provincial and municipal development and reform committees in 2019, involving about 59 urban rail transit lines, with a total project investment of about RMB970 billion. Of these, about 29 lines are already under construction (2 have entered the trial operation period), and the remaining 30 lines are expected to be fully constructed in 2020. "considering that the period of urban rail construction is usually longer than one year, it is expected that the scale of investment during the year will be about 40% of the total investment, that is, the scale of urban rail investment in 2020 is expected to reach about RMB400 billion - 500 billion, and the mileage of rail transit operation is expected to exceed 8000 km.
Among the rail transit operation lines, subway, urban fast rail and trams are the main lines. Subway accounts for 75.6%, urban fast rail accounts for 11.1%, and trams account for 5.7%. Aladdin (ALD) estimates that rail transit will bring about 51300 tons of aluminum consumption in 2020.
As for railways, according to the data disclosed by the Ministry of Transport at the beginning of the year, a railway investment plan of RMB800 billion is planned for 2020. In the impact of the epidemic and the position of the government, new infrastructure projects will be launched, and railway investment is very likely to be further increased. According to data released by the China Railway Group, by the end of 2019, the mileage of China's railways will be more than 139000 km, including 35000 km of high-speed rail. 4000 km of new lines are planned to be put into production in 2020, of which 2000 km will be high-speed rail. Aladdin (ALD) estimates that an additional 24500 tons of aluminum is expected to be used for high-speed rail in 2020.
UHV becomes one of the few demand growth points of aluminum for electric power.
In recent years, with the gradual completion of the transformation of China's power grid, the growth rate of power investment has also declined. In 2019, the total investment in power grid was RMB485.6 billion, down 9.62% from the same period last year. This is also the first time in the past four years that the completed investment in power grid has dropped to less than RMB500 billion, and the year-on-year decline is the lowest in recent years. In 2019, the length of new transmission lines was 34022 km, down 17.2% from the same period last year, also the lowest level in nearly four years. Under the background that the previous large-scale construction investment led to increased losses in various provinces, in December, the two major national power grid companies issued a notice to restrict power grid investment, which once again cast a shadow over the development of the power industry. However, despite the decline in the growth rate of power investment, because China's energy distribution is far away from the load center, long-distance power transmission requires UHVDC transmission, resulting in UHV in China has become one of the few growth points in the power industry.
Since 2020, the State Grid has changed its commander-in-chief. Under the influence of novel coronavirus, the State Grid has taken 12 measures to promote the resumption of construction to deal with the impact of the epidemic and to boost enterprises to resume work and production. The state grid has also increased significantly from previously planned investment of 408 billion yuan to RMB450 billion, of which the investment scale of UHV construction projects is 181.1 billion yuan, which can drive social investment of 360 billion yuan, with an overall scale of 541.1 billion yuan. At the same time, recently, the State Grid has studied and compiled the "2020 UHV and inter-provincial 500 kV and upper AC / DC project preliminary work plan". It is clear that it will speed up the approval and pre-feasibility study of 5-DC UHV projects such as the Nanyang-Jingmen-Changsha project within the year, actively promote the construction of key projects under construction, and resume work on Qinghai-Henan, Yazhong-Jiangxi ±800 kV UHVDC and Zhangbei flexible DC. Mengxi-Jinzhong, Zhangbei-Xiongan 1000 kV UHV exchanges and other major projects, a new round of UHV construction is on the way.
UHV aluminum is mainly concentrated in wires and cables, according to the summary of corporate bidding projects, if the above projects are put into construction, the length of UHV wire and cable construction in 2020 is expected to reach 8500 km, combined with the 2018 approval of part of UHV projects to enter the final stage, we expect the annual construction length will reach about 9000 km, Aladdin (ALD) estimates, 2020 UHV wire and cable aluminum is expected to reach 869100 tons.
To sum up, in the case of the sharp increase in downward pressure on the economy due to the outbreak of the epidemic and the malaise of consumption in the lower reaches of aluminum, the new infrastructure is tantamount to providing charcoal in the snow. Under the background that it is difficult for the traditional manufacturing industry to make a big breakthrough in the economic downward cycle, there is no doubt that the new infrastructure will speed up, which will drive at least 969900 tons of aluminum consumption.