Long-term bullish aluminum prices in 2021
Macro, United States aggressive fiscal stimulus and quantitative easing, the Fed's firm; on the industry, under its own supply and demand gap has phased background interference of the supply side of the rise, will no doubt appeal to fund the enlarged aluminum, thus promoting aluminum prices accelerated Up. Affected by the entire commodity risk aversion, the downstream consumption was suppressed after the spot aluminum price rose sharply.
Standing at the current point in time, aluminum prices are still bullish in the long-term outlook, but we need to grasp the rhythm of doing more.
Shanghai Aluminum may turn to high and wide fluctuations in the later stage, waiting for the verification of the fundamentals. It is not ruled out that the possibility of new highs under the influence of emotions is not ruled out, but the fluctuation range will be greater.
U.S. long-term bond yields soared sharply in the short-term to suppress market risk appetite
U.S. Treasuries suffered a violent sell-off, and 5-year and 10-year yields rose above important points, sounding the alarm for risky assets. U.S. technology stocks plummeted, and offshore renminbi recorded its biggest decline since October last year. Fed officials declared in unison that rising yields are signs of economic optimism, and there is no need to worry about it. At the same time, the U.S. House of Representatives voted to pass a new round of economic rescue plans of US$1.9 trillion. This new round of economic rescue plan with a total value of 1.9 trillion US dollars proposed by US President Biden aims to provide financial support to American families and businesses affected by the new crown epidemic. Fed Chairman Powell revealed in his congressional testimony that debt purchases will not be curtailed until economic data has improved significantly, and inflation may take a long time to rise.
Profit trend, domestic supply maintains high growth
In January 2021, China's electrolytic aluminum production was 3.323 million tons, a year-on-year increase of 8.14%. As of the beginning of February, the national electrolytic aluminum production capacity increased to 39.55 million tons/year, the built-up capacity scale was 43.2 million tons/year, and the national electrolytic aluminum enterprise operating rate increased to 91.6%. With aluminum prices at a high level in the past three years, the profit level of smelting companies is relatively high, and the certainty of subsequent output growth is still strong. According to Baichuan data, the weighted average of the tax-included full cost of China’s electrolytic aluminum industry in January 2021 is It is 13135.3 yuan/ton, an increase of 133.4 yuan/ton from the 1,3001.89 yuan/ton in December 2020.
Inner Mongolia adjusts electricity price policies in some industries to increase the cost of electrolytic aluminum
On February 7, the Development and Reform Commission of the Inner Mongolia Autonomous Region and the Department of Industry and Information Technology of the Inner Mongolia Autonomous Region recently issued a notice (hereinafter referred to as the "notice") on the adjustment of electricity price policies and power market transaction policies for some industries. The market is paying attention to this document. The notice related to electrolytic aluminum is mainly related to the four items in the first part of "Adjustment of Electricity Price Policies for Some Industries":
(1) Starting from February 10, 2021, the electricity price policy of 3.39 cents per kilowatt-hour for the basic electricity fee of the electrolytic aluminum industry in West Inner Mongolia will be cancelled, and the inverted-step transmission and distribution price policy of the West Inner Mongolia power grid will be cancelled.
(2) Starting from February 10, 2021, self-provided power plants will pay policy cross-subsidies based on self-generated and self-consumed electricity. The Mengxi and Mengdong power grids will charge 0.01 yuan and 0.02 yuan (tax included) per kWh, respectively.
(3) Continue to implement the tiered electricity price policy for the electrolytic aluminum, cement, and steel industries. The energy consumption standards and price increase standards in 2021 will be implemented in strict accordance with national regulations. In 2022 and 2023, the Ministry of Industry and Information Technology of the Autonomous Region will study and formulate more stringent energy consumption standards. The Development and Reform Department of the Autonomous Region will clarify the price increase standards and increase them by 30% and 50% respectively on the basis of the current level. According to the list of enterprises (production equipment) with excess energy consumption per unit product verified by the Ministry of Industry and Information Technology of the autonomous region and the price increase standard announced by the development and reform department of the autonomous region, the power grid company will charge a price increase according to the production electricity consumption of the enterprise (production equipment) (including market-oriented transaction electricity) Electricity bill.
(4) In strict accordance with national regulations, the eight industries of electrolytic aluminum, ferroalloy, calcium carbide, caustic soda, cement, iron and steel, yellow phosphorus, and zinc smelting shall be implemented with differential electricity price policies. The levy standard in 2021 is 0.1 yuan per kilowatt-hour for the restricted category, 0.3 yuan per kWh for the eliminated category (0.4 yuan per kWh for cement, 0.5 yuan per kWh for steel), and the differential electricity price increase standard for 2022 and 2023 is lower than the current level. Increase by 30% and 50% respectively on the basis. Starting from the second quarter of 2021, the industry and information department of the autonomous region, in conjunction with relevant departments in accordance with national and autonomous regional industrial policies and other regulations, screened the list of eliminated and restricted enterprises (production equipment) of backward production capacity in the autonomous region that year. The list of enterprises (production equipment) and the price increase standards announced by the development and reform department of the autonomous region shall be charged according to the production electricity consumption (including market-oriented transaction electricity) of the enterprise (production equipment).
According to the calculation of the average power consumption per ton of electrolytic aluminum production of 13,500 kWh, the operating cost per ton of electrolytic aluminum in Mengxi and Mengdong increased by about 135 yuan and 270 yuan respectively. On the whole, the cost of self-provided electricity and grid electricity in Inner Mongolia's electrolytic aluminum plant will record small increases in the short-term, and in addition to the short-term direct impact on the cost side, combined with Inner Mongolia’s "Ensuring the "14th Five-Year" Energy Consumption Double Control Target Tasks Safeguard Measures (Draft for Comment) and this notice, Inner Mongolia has a firm attitude towards energy consumption control in the region. Electrolytic aluminum is a high-power-consuming industry. The speed and scale of continuous expansion of production capacity in the region are expected to be affected by policies in the medium and long term. limit.
Mengdong smelter may be forced to reduce production by 150,000 to 200,000 tons
Last week, it was reported in the market that Inner Mongolia was the only one in the country to have a serious over-control of its energy consumption increase. However, during the "14th Five-Year Plan" period, there was a huge gap in the energy consumption indicators for new projects in Inner Mongolia. The electrolytic aluminum enterprises in the eastern region reduced production. There are already aluminum plants in the region that have reduced production, but the output has little impact for the time being. Special attention should be paid to whether the scale will be further expanded, and whether the 600,000 newly invested capacity in the region in 2021 will be delayed by this impact. Driven by this news, the price stood at 17,000.
Auto production and sales are strong, and home appliance exports remain strong
In January 2021, China's auto sales increased by 25% year-on-year and fell by 5% month-on-month. Among them, the sales of new energy vehicles in the month increased by 306.8% year-on-year, and fell by 27.8% month-on-month. China's auto market as a whole continued the momentum of improvement in the second half of last year, and sales of new energy vehicles grew strongly. In the first week of February, China's auto sales rebounded by 15% month-on-month. In response to government policies, some local governments have postponed the new energy subsidy policy until 2022, which has positive significance in supporting the consumption of new energy vehicles.
to sum up
During the Spring Festival, due to the downstream holiday, the social inventory of electrolytic aluminum and the in-factory inventory quickly accumulated, but the accumulated inventory did not meet expectations. The consumer end is in a recovery phase, and follow-up expectations are good. At the same time, there is news that Inner Mongolia has not completed the "dual control" task of total consumption intensity in 2019, which has triggered concerns about the possible reduction of production of electrolytic aluminum plants, which is a record high according to the long-lasting Shanghai Aluminum. Due to the increased adjustment pressure after the rapid increase in aluminum prices, Shanghai Aluminum may turn to high and wide fluctuations in the later stage. Waiting for the verification of the fundamentals, the possibility of new highs under the influence of emotions is not ruled out, but the fluctuation range will be greater.
