Supply will shrink significantly
At the beginning of this year, the Ministry of Environmental Protection issued the “Draft for Comment on the Work Plan for Air Pollution Prevention and Control in 2017 in Beijing, Tianjin and Hebei and the Surrounding Areas”. As this limited production range includes two major provinces of electrolytic aluminum and alumina production in Shandong and Henan, plus companies in the Beijing-Tianjin-Hebei region, it is estimated that one-third of the country's electrolytic aluminum production capacity and nearly half of the alumina production capacity will be affected. Judging from the current situation, there will be more than 28 cities that are required to limit production during the heating season. The newly added limited-production cities include Luoyang, Pingdingshan, Sanmenxia and Gongyi City in Henan Province, and Luliang City in Shanxi Province. At present, many cities have issued a heating season limited production plan. Under the background of the government's resolute control of pollution, the probability of a limited production plan will be strictly enforced. Therefore, when the heating season comes, the overall supply of electrolytic aluminum will shrink significantly, thereby boosting the price of aluminum.
Raw material prices remain high
Since August, the price of alumina and pre-penetration anodes, the main raw materials for electrolytic aluminum, has started to rise rapidly. As of October 26, the average price of alumina and pre-penetration anodes was 3,730 yuan/ton and 4510 yuan/ton, respectively. High position in 5 years. As of the end of September, the average cost of electrolytic aluminum enterprises has reached 15,276.12 yuan / ton, also in the past five years. As alumina and pre-cultured anode production will also be limited, raw material prices may continue to rise, and electrolytic aluminum production costs are expected to remain high during the heating season and may even be further elevated. Shanxi is a large alumina province, and Luliang alumina accounts for more than 50% of Shanxi's total alumina production capacity. The limited production of Luliang City will further push up the price of alumina.
Electrolytic aluminum production continued to decrease year on year
The data shows that the output of electrolytic aluminum in September was 2.61 million tons, the lowest output since April 2016. The year-on-year growth rate was -5.6%, the third consecutive year of year-on-year growth was negative, and the decline was 1.9 percentage points higher than the previous month. From January to September, the cumulative output of electrolytic aluminum was 24.66 million tons, an increase of 5% year-on-year, and the growth rate was 1.1 percentage points lower than that of January-August. The decrease in the output of electrolytic aluminum in the month indicates that substantial progress has been made in the reform of the supply side of electrolytic aluminum.
On November 15th, Beijing-Tianjin-Hebei environmental protection production will begin, and electrolytic aluminum production is expected to decrease further during the heating season. As of October 26, the aluminum inventory of the previous period was 589,657 tons, which is at a historical high. When the production limit starts, the inventory may start to decrease, so it is expected that the high inventory has a limited effect on the aluminum price.
Lun aluminum performance boosts Shanghai Aluminum
In terms of external disk, the global aluminum market is in a state of tight supply. According to the data, during the period from January to August this year, the global primary aluminum market supply shortage was 1.572 million tons, and the 2016 annual shortage was 766,000 tons. In terms of inventory, as of October 26, LME aluminum stocks were 1,191,550, which was in the low level in the past five years, while Lun aluminum also hit a new high of US$2215/ton on October 26, and the high aluminum level operation will be to a certain extent. On the formation of Shanghai aluminum boost.
In addition, from the data of real estate, the completion of real estate development investment from January to September was 806.44 billion yuan, an increase of 8.1% year-on-year, which was 0.2 percentage points higher than the growth rate of January-July, which was better than 5.8% in the same period of last year. It is 1.2 percentage points higher than the annual growth rate of 6.9%. In September, the real estate development climate index was 101.44, an increase of 0.02 points from August. At present, the real estate market is stable and there is no obvious decline. Therefore, the downstream demand is stable, which will support the aluminum price to a certain extent.
In summary, the heating season limit production will inhibit the production of electrolytic aluminum, and will inhibit the production of alumina and pre-cultured anodes, the price of electrolytic aluminum raw materials will continue to rise, and aluminum prices will be supported by cost. Although domestic stocks are currently at a high level, with the arrival of the heating season, stocks will be consumed and fall back from high levels. The outer disk is basically oriented to the strength of the Lun aluminum to maintain a strong, Shanghai aluminum or to some extent to be boosted. Therefore, it is expected that the main contract of Shanghai Aluminum will show an easy rise and fall in the heating season, and it is expected to challenge the previous high of RMB 17,250/ton.