core point
Medium and long-term: The domestic electrolytic aluminum production capacity is approaching the ceiling, and the elasticity of electrolytic aluminum supply has weakened for a long time. As of the end of March, the national production capacity has returned to 40 million tons again, and the completed production capacity has reached 43.65 million tons. The production capacity will approach the ceiling of 45 million tons by the end of the year.
This year, my country’s electrolytic aluminum production is expected to approach 40 million tons, but the supply and demand pattern is still tight. Last year, domestic electrolytic aluminum production was high and then low, and this year is expected to be low and then high. Domestic aluminum smelting is very profitable, and large-scale production has been resumed. The average daily output of electrolytic aluminum in the first four months has steadily increased. With sufficient energy supply, the average daily output of electrolytic aluminum is expected to continue to rise. The annual output of electrolytic aluminum increased by 3.78% year-on-year to 39.88 million tons.
The difference in energy costs at home and abroad will support the continued high profit status of my country’s aluminum plants. At present, energy costs in Europe are still at a high level, and electrolytic aluminum plants have not resumed production due to the reduction and shutdown of production capacity, which has promoted a significant increase in my country’s aluminum exports. High smelting costs in Europe will form a lower support for aluminum prices, otherwise they will face larger-scale production cuts. The energy consumption intensity of electrolytic aluminum smelting in Europe is at a high level in the global electrolytic aluminum cost curve, while my country is the region with the lowest energy consumption intensity of electrolytic aluminum in the world. At the same time, under the background of stable supply and price in my country, coal prices remain stable, electricity costs are lower than those in Europe, and the energy price difference between domestic and foreign will support the continued high-profit state of domestic electrolytic aluminum smelters.
New energy & new infrastructure drive long-term growth in demand for electrolytic aluminum. The high growth rate of automotive lightweight & new energy vehicles boosts aluminum demand. It is estimated that the global aluminum consumption for new energy vehicles will reach 2.03 million tons and 2.92 million tons respectively this year and next, with an annual increase of 750,000 tons and 890,000 tons. The installed capacity of photovoltaics has grown rapidly. It is estimated that the global photovoltaic industry will use 4.2 million tons and 5.04 million tons of aluminum this year and next, an annual increase of 840,000 tons. In 2022, the construction of UHV will be accelerated. The State Grid plans to build UHV “24 AC and 14 DC” during the “14th Five-Year Plan”, involving more than 30,000 kilometers of lines, 340 million kVA of substation and conversion capacity, and a total investment of 380 billion yuan. Only 2022 In 2018, State Grid plans to start construction of 13 UHV lines of “10 AC and 3 DC”.
Short-term: Stabilizing economic policies and improving the epidemic situation, although the peak demand season is late, it will come. Affected by the epidemic, downstream demand in the traditional peak season of consumption this year is weak. However, the economic stabilization policy continued to exert force, the real estate policy was fully relaxed, the automobile purchase tax was halved, and the consumption of automobiles and home appliances in the countryside was promoted. At the same time, the domestic epidemic situation has improved significantly. Learning from the experience in 2020, the company may rush to production in the second quarter after resuming work and production, and the peak demand season will arrive although late.
In 2022, the global aluminum market will continue to be in a state of supply shortage. Monetary policies in Europe and the United States have been tightened, and the growth rate of overseas demand has slowed down, but it is higher than that of the domestic market. Superimposed on the reduction of production in Europe, the overseas supply has grown at a low rate, and the gap between supply and demand has widened. Domestic production has been low and then high, and the epidemic prevention measures have led to a decline in demand growth and a narrowing of the gap between supply and demand. Overall, the global aluminum market supply is expected to continue to be in short supply in 2022, and the gap will expand slightly.
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