Aluminum: Resumption of production capacity will increase as prices increase
In November 2015, the domestic spot aluminum price fell to the lowest price of 9710 yuan/ton in the past 20 years. The price can only cover the direct material in the production cost (electricity cost 4050 yuan + alumina cost 4000 yuan + anode block 1500 yuan + cryolite 100 yuan) ), direct labor and manufacturing costs are not covered. If we consider the cash cost, 40% of the electrolytic aluminum capacity in the world (excluding China) is profitable, and 20% of China's electrolytic aluminum capacity is profitable.

Since aluminum prices were lower than cash costs, in December 2015, 14 domestic backbone electrolytic aluminum companies announced production cuts and promised not to restart the shutdown capacity. Due to the high cost of restarting electrolytic aluminum, once the shutdown is likely to be small after the shutdown, the joint production reduction will substantially reduce the short-term supply of electrolytic aluminum. The data also verified the effect of reducing production. The monthly output of China's electrolytic aluminum has declined for six consecutive months, and the monthly output has dropped by a maximum of 17%.

The decline in China's output has caused a change in domestic supply and demand, and aluminum prices have rebounded sharply since December last year. Domestic spot aluminum prices rose to a maximum of 12,850 yuan / ton, the largest rebound rate of 32%, this price has been higher than the average cash cost of domestic electrolytic aluminum companies. According to RUSAL statistics, when domestic aluminum prices rose to 13,000 yuan / ton, only 5% of China's electrolytic aluminum capacity was a cash loss, which was a significant increase from November 2015; when the international aluminum price rose to 1670 US dollars / At the time of the ton, the global electrolytic aluminum cash loss production capacity ratio is less than 10%.

According to statistics, in 2015 China's electrolytic aluminum market has reduced production by 4.496 million tons. Among them, the shutdown capacity is about 1 million tons, and the rest is elastic production.

The author believes that due to the improved profitability of electrolytic aluminum enterprises, the production capacity of elastic production will resume production with the rebound of aluminum prices. When the rebound in aluminum prices is sufficient to cover the restart cost, there is also the possibility of resumption of production capacity.

The data also confirmed the ongoing judgment of the resumption of production. After three consecutive months of decline in production, China's electrolytic aluminum production rebounded sharply from March. In May 2016, China's electrolytic aluminum output was 2.68 million tons, an increase of 4% from the previous month, and the output returned to the level of November 2015. From the perspective of aluminum prices, the current aluminum price is 500 yuan/ton lower than the same period of last year, but the cost of the decline in alumina prices has dropped to 1,000 yuan/ton, and the operating status of electrolytic aluminum enterprises has improved year-on-year. Therefore, the author judges that with the further increase of aluminum prices, the production capacity of resumption of production will increase. With the end of the commitment period in December 2016 when new capacity is not put into production, the new capacity will further increase the supply pressure of the market. Therefore, the author judges that the aluminum price trend in 2016 is high and low.

专栏:Industry information
作者: 佚名
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