Abstract: with the expectation of a significant slowdown in economic growth, it is basically certain that the demand for non-ferrous metals has shrunk sharply, and the consumption of the aluminum market is also among them.
Aladdin (ALD) analyzed the correlation between China's electrolytic aluminum consumption and GDP from 2006 to 2019, and the correlation coefficient is 0.988, which is a highly positive correlation, which provides a solid foundation for us to analyze the changes of electrolytic aluminum consumption caused by the change of GDP in China. Compared with the data of GDP and aluminum consumption in the past decade, it is roughly estimated that every 100 million yuan of GDP will drive about 42 tons of aluminum consumption.
With the expectation of a significant slowdown in economic growth, it is basically certain that the demand for non-ferrous metals has shrunk sharply, and the consumption of the aluminum market is also among them. In fact, there are many factors affecting aluminum consumption, especially in the special case of February, the whole society seems to have pressed the pause button, aluminum exports have shrunk sharply, the real estate and automobile industries are even colder, and the impact of aluminum consumption is self-evident.
What if we put aside the impact of key industries and deduce the impact on aluminum consumption only from the perspective of GDP changes? The following is the performance of aluminum consumption in the current economic situation based on the forecast of GDP growth in the first quarter:
We found that the estimated aluminum consumption data is much higher than our actual data based on research, especially the explicit inventory which is significantly higher than the current statistics. Analysis of the reasons, mainly because: first, the existence of a large number of hidden inventory, such as our survey statistics of aluminum ingot inventory so far reached 470000 tons; second, the main consumption areas of aluminum consumption fell off a cliff, which is more serious than the GDP decline.
In terms of the automobile industry alone, according to the statistics of the China Association of Automobile Manufacturers, in February 2020, automobile production was 285000, down 83.9% from January to February compared with the previous year, and the total national automobile production was 2.048 million, down 45.8% from the same period last year. Among them, passenger car production was 195000, down 86.4% from January to February, down 86.4% from January to February, down 48.1% from the same period last year. According to our calculation of 132kg aluminum for passenger cars and 70kg aluminum for commercial vehicles, only aluminum consumption in the automobile industry decreased by more than 200000 tons from January to February compared with the same period last year.
After a brief correction in February, China's manufacturing PMI index rebounded 16.3 per cent to 52 per cent month-on-month in March, back above the rise and fall line, the highest level since October 2017. When interpreting that the purchasing managers' index in March rebounded from the base of sharp decline in February, the Bureau of Statistics said that although important achievements have been made in the prevention and control of the epidemic in China, the economic and social order is being restored quickly. however, the situation of enterprises returning to work and production has not yet returned to the normal level before the epidemic, coupled with the accelerated spread of the epidemic abroad in March, China's economic development is facing new challenges. The March PMI data alone cannot tell whether the economy has stabilized and rebounded, and whether the economy will pick up depends on whether the purchasing managers' index can continue to expand in the coming months, and the trend in the later period still needs to be closely watched.
On March 10, the prime minister of the National standing Committee said, "as long as employment is stable this year, it is no big deal for the economy to grow a little higher or lower." This is the first time that the growth target has been mentioned since the Politburo meeting stressed the ability to achieve the goal of a well-off society. Looking back on the first quarter that just ended, under the impact of COVID-19 's epidemic, the Spring Festival holiday this year was particularly "long", and many areas of China's economy and society shut down in stages. A number of institutions expect GDP growth in the first quarter of this year to be between-3% and-5%, with a negative growth rate for the first time. Aladdin (ALD) may draw lessons from the above analysis of aluminum consumption caused by drastic changes in China's economy in a short period of time.