Production restriction policy has a significant impact on the supply side of Guangxi aluminum industry

From September 26th to 29th, the author accompanied the research team to investigate the aluminum industry chain in Guangxi. This survey visited 10 companies, including 2 electrolytic aluminum production companies, 2 alumina production companies, and 6 aluminum profile production companies. enterprise. Regarding whether the electrolytic aluminum production limit in Guangxi is strict, how the power limit policy in Guangxi is implemented, whether the power limit has an impact on the price of raw materials, whether the downstream demand for power ration aluminum has an impact, and the interviewed companies have an impact on the aluminum home and the raw material alumina market outlook How to look at the price and other issues have been in-depth understanding.

In the survey, 10 companies all reported that Guangxi is currently restricting electricity, but there are disagreements as to whether there is a shortage of electricity in Guangxi. All 10 companies reported that the electrolytic aluminum production capacity in Guangxi is strictly limited, with a 30% production limit, which is consistent with policy requirements. Similarly, 10 companies also reflected that the increase in raw material prices has brought adverse effects to companies, although this will lead to a strengthening of the support for the cost of electrolytic aluminum. It is worth noting that six aluminum profile companies coincidentally reflect the pressure on business operations brought by the rising prices of silicon and magnesium. The increase in natural gas prices was also mentioned by one alumina company and three aluminum profile companies. None of these products have corresponding futures products in the country, but they have brought difficulties to the company’s operation and are worthy of the attention of researchers and employees of risk subsidiaries. On the demand side, 4 of the 6 aluminum extrusion plants reported poor demand performance. The recent power rationing in Guangdong is a factor leading to sluggish demand. Regarding the future trend of aluminum prices, two alumina companies and two electrolytic aluminum companies believe that there is still room for aluminum prices to rise, mainly due to factors such as electricity curtailment and environmental protection that have led to continued increases in raw material prices. The six aluminum profile companies expressed confusion about the price trend.

According to the survey, the current energy consumption policy in Guangxi is strictly implemented, and local electrolytic aluminum and alumina enterprises are restricted in production. Although the current national power rationing has caused a certain impact on the lives of residents, electrolytic aluminum and alumina enterprises are high energy-consuming industries. Even if the power rationing is released in the future, the impact on the aluminum industry will be limited. Under policy constraints, the output of electrolytic aluminum and alumina is still not expected to increase.

Since electricity has had a significant impact on the production of aluminum ingots and aluminum rods this year, as far as China’s power generation structure is concerned, 80% of electricity is currently generated by thermal power, and about 8% is generated by hydropower. As of September 30, the closing price of the main thermal coal futures contract was 1393.6 yuan/ton, a record high. It can be seen that the current cost of electricity is very high. In October, Yunnan Province will enter a dry season, when the local power supply will decline. Silicon production in Yunnan may continue to be restricted. As far as magnesium is concerned, the current production limit in Shaanxi is also very strict, and the supply of magnesium is expected to be tight. The production cost of aluminum rods may remain high.

It is important to note that in February next year, the Beijing Winter Olympics and the Paralympic Winter Games will be held. In order to successfully host these two world-renowned events, the air quality requirements in North China may be more stringent this winter. In addition, it is understood that the range of air quality regulation this winter will be increased. Even if China has increased its coal supply this winter, the priority of people’s livelihood is still higher than that of industry. Therefore, it is expected that this winter, industrial enterprises in North China will still have electricity restrictions, leading to continued high prices of raw materials.

In terms of demand, aluminum profile companies generally report that orders in the construction industry are average. Judging from the real estate data, the amount of real estate investment and development completed and the sales area of ​​houses have declined, but the data of the completed area of ​​houses has maintained a steady increase. From January to August, the area of ​​completed houses was 467.39 million square meters, an increase of 26.0%. The year-on-year growth rate was 0.2 percentage points higher than that from January to July. After the house is built, real estate companies will purchase aluminum Alloy doors and windows. The completed area data shows willfulness, which will theoretically boost aluminum consumption, but this year’s “Golden Nine, Silver and Ten” real estate consumption peak season has shown mediocre performance. In terms of automobiles, the auto production and sales data from January to August performed poorly, and data on home appliances such as refrigerators, air conditioners, and washing machines were not good. This is also in line with the situation reported by Guangxi Aluminum Co., Ltd. Baise Branch: orders for automobiles and home appliances are poor. On the whole, domestic consumption performance is relatively flat, but related export data, such as export of auto parts and unwrought aluminum and aluminum profiles, are all performing well, but external demand only accounts for about 10% of total electrolytic aluminum demand , The boost to aluminum prices is limited. On the whole, I personally believe that the demand for aluminum is indeed not very good, as reflected by the interviewed companies.

In terms of inventory, as of September 30, the social inventory of SMM was 815,000 tons, an increase from 771,000 tons in mid-September. This also reflects that the current power curtailment has also affected the production of downstream enterprises, and through Foshan Traders have learned that there are not many downstream companies stocking up before the National Day holiday this year, and there is almost no “pre-holiday stocking up”. However, the extent of inventory accumulation is not high, and it is recommended to continue to pay attention.

On the macro level, China’s official manufacturing PMI in September was 49.6, which fell below the line of prosperity and decline, expected to be 50, and the previous value was 50.1. All sub-items have also weakened to varying degrees, indicating that the downward pressure on China’s economy has further increased, which is negative for aluminum prices; and China’s fiscal expenditure progress has been slow in the first half of the year. Facing the downward pressure on the economy, the government may also increase fiscal expenditures in the second half of the year. As a buffer, infrastructure projects will be launched by then, and the demand for aluminum will be boosted. It is recommended to pay attention to our country’s fiscal planning plan in the second half of the year. In foreign countries, the US macro data has improved, boosting the US dollar index. The US dollar index has now exceeded 94 US dollars, setting a new high for the year. The strengthening of the US dollar index will also put pressure on aluminum prices to rise. On the whole, the macro aspect is also negative for aluminum prices.

In summary, due to the impact of limited electricity, the demand for electrolytic aluminum has been suppressed, and the dollar is strong, aluminum prices may be adjusted in the short term. The production of coal and other production capacity is restricted. The cost support of electrolytic aluminum is strengthening.