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    The aluminum price is low, the industry is in deep trouble, and the inventory is shrinking.

    2019-03-14 09:24:54

    Securities TimesZhao Lizhen

    After experiencing a gradual decline in prices in 2018, the domestic aluminum commodity market price has approached the low point of 13,000 yuan / ton, and the whole industry is deeply hurt.

    Securities Times·e reporter recently learned from interviews with upstream and downstream enterprises in the aluminum industry. Although the aluminum companies have experienced a certain capacity reduction in the past year and the market inventory has declined, the current demand is still unable to significantly boost the market price. The situation that exceeds the demand still exists. It is expected that the aluminum price will still be weak in 2019, and it is difficult to have a sharp rise in the short term.

    Aluminum price is approaching 13,000

    "In the past few days, the spot aluminum price in the market is about 13,600 yuan / ton, which has been a little higher than the previous period." Talking about the price of the domestic aluminum industry in the past year or so,Shenhuo sharesDong Hong Li Hongwei told reporters that in January 2019, the domestic aluminum spot price has once dropped to 13,250 yuan / ton, reaching the low point in recent years.

    In 2017, affected by factors such as supply-side reforms, domestic aluminum prices have risen all the way, reaching an all-time high of over 17,000 yuan/ton. However, since the price decline in October 2017, the aluminum market has continued to suffer.

    "In 2018, the price of aluminum bottomed out, and the annual low was low. The shock range was 13450 yuan to 15,000 yuan / ton. In the first 9 months, the aluminum price was roughly 'W', and the aluminum price in the fourth quarter was monotonous." Looking back at the trend of aluminum prices in the past year, Ye Jianjun, an aluminum product analyst of the business community, said that in the first half of January 2019, the average price of aluminum ingots continued to be weak. On January 15, the average price of aluminum ingots fell to 13223.33 yuan / ton. For the past two years, the price of aluminum ingots began to stabilize.

    According to business community data, as of March 11th, the average market price of aluminum (99.70) was 13,630 yuan / ton, compared with the first working day (February 12), the average market price of 13,350 yuan / ton, an increase of 2.53%; The quoted price increase was 3.08% compared with January 15.

    Ye Jianjun said that the recent aluminum price stabilized and rose. On the one hand, based on the fourth quarter of 2018, the aluminum price dropped sharply. The high-cost aluminum plant suffered a serious loss. Some domestic aluminum plants continued to reduce production and pressure production, and the industry's independent production capacity was obvious. On the other hand, in terms of policies, Sino-US trade relations have eased internationally, demand has gradually picked up under the stimulation of domestic infrastructure, the application of aluminum products has expanded, and the fundamentals of domestic aluminum ingots have gradually improved. In addition, the price of alumina in the early stage was lowered due to the lower price of alumina, and the cost support was expected to collapse. After the aluminum price plunged, it basically bottomed out. It is expected that the price of aluminum ingot will still be repaired in the near future.

    “After the Spring Festival, the spot price of the aluminum market has indeed increased a bit. However, since March, due to the previous increase, the willingness to take goods downstream is relatively weak. The large households are still in the state of stocking, and the prices have certain support, but there is still no big uptrend in the long run.” Zheng Chunlei, an analyst at Zhuo Chuang Aluminum, also said that the domestic aluminum price trend will stabilize after the year, but the growth momentum in the later period is not too strong. Although aluminum prices have continued to grow, aluminum companies are still losing money, and aluminum companies are still in production after the holiday. 2. The demand for aluminum in the whole month was flat and the demand season was not yet reached. The recent upside of the aluminum price is the start of the downstream and the demand is increasing, but the overall demand increase is relatively limited. At present, the supply of aluminum market is still sufficient.

    Not only did aluminum prices hit a low level, but as the upstream of electrolytic aluminum, domestic carbon prices have continued to fall for nearly a year. On March 12, the reporter went to a medium-sized carbon production plant in Gongyi, Henan Province, and saw a small amount of carbon block products in several greenhouses. Although the Spring Festival holiday has passed a month, there are still no signs of construction in the factory, and the same types of companies are also relatively deserted.

    “The winter production period has not yet passed. Many companies have stopped production since last November. The carbon price has been at a low level in the past year, and the company has reduced production appropriately.” Hu Mingzhe (pseudony), the head of the carbon plant According to the reporter, in 2017, the domestic carbon price reached a high of 4,400 yuan / ton, and the current offer has been less than 3,200 yuan / ton. In February, the price of carbon in the leading Weiqiao of Shandong fell by 140 yuan / ton, and in March the company fell again by 140 yuan / ton, showing two consecutive declines.

    “In 2017, the price of that wave rose. First, because the first batch of carbon companies that were not in place in the middle of the year stopped all. The cost of newly added environmental protection equipment increased and the market supply decreased. In addition, the domestic electrolytic aluminum production capacity was exposed one after another. The market was panicking, and the downstream actively smashed goods. At that time, many electrolytic aluminum companies had to take cash to buy goods in the factory. However, at the end of October 2018, due to the fact that the production of the peak production was not as expected, the environmental protection and production restrictions did not cut across the board. The market is also lacking speculation expectations, and product prices have fallen sharply since then." Hu Mingzhe analysis.

    Comprehensive loss

    Along with the sharp drop in aluminum prices, aluminum companies have also entered a comprehensive loss.

    “Since last year, the aluminum industry has started a long-term, industry-wide loss. The loss time is so long, it has exceeded the normal situation.” Talking about the current profit and loss situation of aluminum industry companies, Li Hongwei told reporters that it is understood that aluminum is currently Nearly 97% of companies in the industry are losing money. As a province with large capacity for electrolytic aluminum, the loss of 1 ton of products produced by electrolytic aluminum enterprises in Henan can exceed 2,000 yuan.

    Liu Libin, executive vice president of Henan Nonferrous Metals Association, also pointed out in an interview that most of the domestic electrolytic aluminum enterprises are at a loss, and the market price should be at the bottom. If the price is lowered again, unless the upstream raw material coal or alumina appears to have fallen sharply. However, it seems that alumina is unlikely to continue to cut prices.

    He said that the cost of electrolytic aluminum in Henan is now 15,000 yuan / ton. At the current market price, almost none of the companies can make a profit. In the whole country, the companies that can make profits at the current price are also very small.

    According to the statistics of the Ministry of Industry and Information Technology, the average spot price of domestic electrolytic aluminum in 2001 was 14,262 yuan/ton, down 1.8% year-on-year. Due to environmental protection, the price of bauxite continued to rise, the price of coal rose, and the cost of energy saving and emission reduction of enterprises increased. Production costs have increased significantly year-on-year. In 2018, the aluminum industry realized a profit of 37.2 billion yuan, a year-on-year decrease of 40%. Among them, aluminum mining and mining achieved a profit of 700 million yuan, an increase of 19.6%; aluminum smelting, aluminum processing industry realized profits of 11.2 billion yuan, 25.4 billion yuan, down 54.6%, 31.4%.

    Shen WanhongyuanThe research report also said that the slowdown of domestic macroeconomic growth in 2018 superimposed the escalation of Sino-US trade friction. The price of aluminum fell from 15,260 yuan/ton at the beginning of the year to 13,605 yuan/ton at the end of the year, down 10.8% year-on-year. The decline in prices has caused the company's earnings to deteriorate, and some manufacturers have been forced to stop production due to continued losses. It is estimated that as of the end of January 2019, the industry still has more than 15% of the operating capacity, the cash cost is located at the aluminum price of 13,500 yuan / ton, of which 500,000 tons of capacity losses more than three months.

    The current decline in the performance of aluminum companies is also evident in the 2018 performance forecast of listed companies.

    February 28,Chang AluminumThe release of the 2018 performance report shows that during the period, the company achieved operating income of 4.209 billion yuan, an increase of 3.58% over the same period of the previous year, and a net profit loss of 432 million yuan, a decrease of 352.99% compared with the same period of last year. Previously,Yun AluminumThe 2018 performance forecast released is expected to result in a loss of 1.46 billion yuan during the period, while the company's net profit in 2017 was 657 million yuan. andZhongfu IndustryThe performance forecast also said that the company's net profit is expected to lose 1.8 billion yuan to 2.2 billion yuan in 2018, down 1.6 billion yuan to 2 billion yuan over the same period last year.

    Part of the capacity is completely withdrawn

    "At present, some enterprises in areas with lower electricity tariffs such as Xinjiang and Yunnan can barely maintain breakeven. Other regions are difficult to bear losses for a long time, and they have begun to consciously shut down production capacity." Hu Mingzhe told reporters that the environmental protection of electrolytic aluminum enterprises in the central region The pressure is too high, and the electricity bill is relatively high. The production cost of tons of aluminum is between 14,200 yuan and 14,500 yuan, while the cost in Xinjiang can be reduced to about 13,800 yuan. Even so, the Qinghai area, which is also in the west, has heard news that two electrolytic aluminum companies have implemented shutdowns.

    “In 2018, there was little new capacity for electrolytic aluminum in Henan, and there were more companies that reduced production.” Liu Libin said that the current aluminum production capacity in Henan is only over 2 million tons, and the capacity can exceed 3 million tons in recent years. . Roughly calculated, from 2018 to the present, only Henan has a capacity of 700,800,000 tons.

    "The production capacity of these shutdowns is basically a permanent exit, and the reason for the suspension is also due to continued losses. This is not only small and medium-sized enterprises, but also some large enterprises." He said.

    According to Shen Wanhongyuan statistics, in 2018, the electrolytic aluminum industry involved a total production reduction of 2.946 million tons, and the production reduction was mainly concentrated in high-cost areas. The reduction in production in 2018 mainly occurred after June. Except for a small number of enterprises such as Shanxi Zhaofeng Aluminium and Dong Aluminum Aluminium, which are affected by environmental factors, most of them are production capacity exit or transfer indicators due to losses. The production capacity reduction is mainly concentrated in Shandong (680,000 tons) and Henan (533,000 tons). ), Gansu (580,000 tons) and other regions.

    In 2018, under the sluggish aluminum price environment, many production projects for new production and new capacity projects were postponed. Baichuan Information Statistics show that the total resumable electrolytic aluminum scale in 2005 was 5.09 million tons. By December 28, 2018, the actual resumption of production was 1.135 million tons, and the proportion of resumption of production was only 22%, which was lower than market expectations. In terms of new production capacity, the total number of domestically built and put into operation in 2018 is 4.05 million tons. By December 28, 2018, it has been put into production of 2.24 million tons, and the production capacity to be put into operation is 1.81 million tons. The scale of production is 55% of the total completed capacity.

    In the process of gradual decline in production capacity, has the high inventory problem that has been constraining the rise in aluminum prices alleviated?

    “The domestic aluminum inventory was over 2.3 million tons last year, but it has dropped to 1.5 million tons to 1.6 million tons. Although the inventory has decreased, the overall impact on the market is not obvious.” Li Hongwei said that in addition to warehouse inventory, enterprises The aluminum inventory can not be counted, so the current inventory data on the market can only be used as a reference indicator, and the significance of the indicator has been reduced.

    Liu Libin also said that the so-called inventory and the market for half a month of production are not available, taking inventory to say things are just inertia thinking. Inventories in the futures market are not too convincing for actual market supply and demand. At present, many domestic enterprises have not produced aluminum ingots, but sold them in the form of aluminum liquid. In Henan alone, more than 70% of enterprises are producing and selling electrolytic aluminum liquid, and the inventory is calculated in the form of aluminum ingots. The concept of inventory has faded from the previous years, and the relative role has been declining.

    Accelerated industrial transfer

    In the profitable environment of the industry's continued downturn, aluminum companies have accelerated the pace of industrial transfer.

    On March 2, Zhongfu Industrial announced that the company's holding subsidiary, Henan Zhongfu Aluminum Co., Ltd. (hereinafter referred to as “Zhongfu Aluminum Industry”) has a capacity of 500,000 tons/year of electrolytic aluminum. In order to further optimize the power and energy structure required for the company's electrolytic aluminum production, reduce the cost of electricity, reduce the carbon emissions from thermal power generation, and achieve green and clean production, the company plans to suspend the production of 250,000 tons of electrolytic aluminum from Zhongfu Aluminum and enrich it with hydropower resources. Transfer of Guangyuan Economic Development Zone in Sichuan Province.

    Prior to this, Linzhou Linfeng Aluminum & Electric Co., Ltd., a holding subsidiary of Zhongfu Aluminum, transferred its 250,000 tons/year electrolytic aluminum capacity in December 2018. After the partial electrolytic aluminum production capacity of Zhongfu Aluminum is 250,000 tons/year, the transfer capacity of the company's electrolytic aluminum production capacity will reach 500,000 tons/year, while Zhongfu Industrial Headquarters Gongyi City only retains 250,000 tons of electrolytic aluminum production capacity. .

    The transfer of electrolytic aluminum capacity of Zhongfu Industrial is not a case.

    “Shenhuo’s 900,000-ton electrolytic aluminum production capacity in Henan has been transferred to Yunnan in October 2018. Subsequently, several aluminum companies in Henan, including Zhongfu and Yichuan, are also following up.” Li Hongwei said that Yunnan Sichuan is rich in water resources, the price of hydropower is 0.25 yuan / kWh, and the cost of thermal power generation in Henan is more than 0.4 yuan / kWh, and the electricity consumption of 1 ton of electrolytic aluminum is calculated at 13700 kWh. Can save the company about 2,000 yuan in cost.

    He said that although the Shenhuo project has not yet been put into production in Yunnan, the relevant government agreement electricity prices have been finalized. In the later stage, Shenhuo's electrolytic aluminum has obvious competitive advantages. Xinjiang's production capacity can enjoy low electricity prices, while Yunnan's capacity logistics costs and electricity prices are low. In the later period, the overall scale of Henan electrolytic aluminum will be gradually reduced. The local industry will focus on the development of high-end aluminum processing, and the construction of aluminum processing bases in Gongyi and Luoyang, and the traditional electrolytic aluminum production will be transferred to areas with cost advantages.

    For the current boom in electrolytic aluminum production capacity, Liu Libin also said that the state has always advocated the use of market-based methods to resolve overcapacity, clean up inefficient capacity, and capacity replacement is a compliance operation.

    “In the general direction, the demand for aluminum is still growing slightly. However, the country has now controlled the new capacity. The only one is the capacity replacement. In terms of enterprise efficiency, the capacity is replaced by the southwest region, and the hydropower resources are abundant. It will be relatively low.” He said that in addition to the 500,000 tons capacity of Zhongfu and the 900,000 tons capacity of Shenhuo, the capacity of electrolytic aluminum transferred from Henan in 2016 has reached more than 1 million tons, accounting for half of the existing capacity. .

    The Ministry of Industry and Information Technology also showed that since the issuance of the "Notice on the implementation of capacity replacement by electrolytic aluminum enterprises through mergers and acquisitions, etc.", China has more than 4 million tons of electrolytic aluminum capacity to complete inter-provincial replacement, of which more than 3 million tons of capacity Transferred to energy-rich areas such as Inner Mongolia and Yunnan, while maintaining the high pressure of electrolytic aluminum production capacity, the electrolytic aluminum industry structure is continuously optimized.

    Good news flash

    At the two national conferences being held, there was good news that the electricity prices of industrial enterprises were lowered and the tax rate was reduced. This has become a topic of common concern in the recent electrolytic aluminum industry.

    The government work report on March 5 pointed out that the reforms should promote the reduction of the fees charged by enterprises, deepen the reform of power marketization, clear the additional charges for electricity prices, and reduce the cost of electricity for manufacturing. The average electricity price of industrial and commercial enterprises will be reduced by 10%. At the same time, the value-added tax of manufacturing enterprises was adjusted from 16% to 13%.

    "The current production of electrolytic aluminum mainly uses cryolite-alumina melting salt electrolysis. Generally speaking, the production of 1 ton of electrolytic aluminum requires 13500 degrees of electricity and 1.92 tons of alumina. Power and alumina are the two most important factors for producing electrolytic aluminum. Costs, respectively, account for 30% to 40% of the total cost. If the cost of electricity is reduced, it is undoubtedly a big advantage for electrolytic aluminum companies." Hu Mingzhe said.

    Tianfeng SecuritiesThe research report also believes that the electricity used for electrolytic aluminum is basically in the category of large industrial electricity. The electricity price is mainly composed of on-grid electricity prices and intermediate fees, including intermediate transmission and distribution prices, government funds and so on. The additional tariffs for electricity prices referred to in the government work report mainly refer to government funds. Currently, the government funds are 0.05 yuan/kWh. If the follow-up government fund is no longer charged, and the average electricity consumption of electrolytic aluminum is estimated at 13,500 kWh/ton, the cost of electrolytic aluminum may drop by 675 yuan/ton, and the profitability of the enterprise will expand. For the tax reduction, the above research report also said that the current sales tax value of electrolytic aluminum enterprises is 16%, the value-added tax is reduced by 3%, and the impact on the gross profit of aluminum enterprises is between 2.65% and 6.63%.

    In this interview, Li Hongwei said that the reform of the electricity market and the adjustment of the value-added tax rate of manufacturing enterprises will be beneficial to the reduction of enterprise electricity costs and tax costs. The company has made preliminary calculations, and it is expected that the tax cost will be significantly reduced in 2019.

    However, Liu Libin believes that the reduction in electricity costs is certainly a good thing for industrial enterprises, but it will not have much effect on existing electrolytic aluminum enterprises. Because the current electrolytic aluminum enterprises have already reduced costs through various methods, the electricity tariff has dropped to a relatively low level compared with other enterprises in the same region, and the room for further decline is not very large.

    Aluminum price is difficult to rise again

    In the interview, most people in the industry told reporters that although the current domestic aluminum price is already at a low level, most of the enterprises are in a long-term loss state, but due to the poor environment in the downstream market, the aluminum price in 2019 may not be significantly higher.

    Liu Libin believes that the current domestic aluminum industry de-capacity has entered the second half, and the industry development will gradually enter a stable state. At present, the main reason for determining the price of aluminum is the contradiction between supply and demand. It seems that the decline in downstream demand for aluminum this year is still very obvious. The performance of several major industries downstream of the property market and automobiles is not very good. The market is unlikely to have a high price like 2017 at 17,000 yuan/ton.

    "However, it is not reasonable for so many companies to lose money and the low price can continue." He believes that the loss of Henan aluminum enterprises has been up to one year. From the second half of 2018 to the present, the business difficulties faced by enterprises should be At the end of the day, the difficulties will not be serious anymore. Regarding market prices, the impact on companies is relative, but also in combination with cost changes. Previously, there have been cases where the price of aluminum was more than 13,000 yuan/ton, and the profit of the company was more than 15,000 yuan/ton. If the upstream price does not fall, the current market price is already at the bottom. Although the market price in 2019 is still difficult to determine, it is expected that half of the companies will be in a loss this year.

    "Because of the cost support, there is not much room for aluminum prices to fall, but if you want to go up, you need an opportunity." Li Hongwei also said that the current market for aluminum stocks is still relatively high. Although there have been some signs of recovery in recent prices, sustainability is not obvious. The market outlook still depends on the demand side, and whether infrastructure and real estate can show signs of recovery. There may be a rebound in the market in 2019, but the possibility of reaching the 2017 high is not too great.

    The CITIC Futures Research Report believes that the current downstream recovery of the aluminum industry and the improvement of upstream profits have driven the release of new capacity. The aluminum price is expected to remain strong and volatile under the macroeconomic stimulus policy, but the absolute price is highly constrained by the increase in supply. There will be significant resistance above 13800 yuan / ton.

    Shen Wanhongyuan also believes that at present, at least 15% of the operating capacity of the electrolytic aluminum industry cannot cover the cash cost. There is a shortage of supply and demand in the industry under the current price of electrolytic aluminum. As the price of electrolytic aluminum is declining, it is expected to rebound by 5%~10%. However, the price recovery is limited. This is because, in the short-term, the potential production capacity of the electrolytic aluminum industry is still excessive. In 2019, the newly added capacity to be put into production and the resumption of production capacity are still relatively abundant. In the absence of policy shocks, the increase in aluminum prices is limited. Once the price of aluminum rises by more than 1,000 yuan/ton, the industry's production is expected to accelerate, and the supply and demand pattern will deteriorate rapidly in the short term.

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    Editor in charge: Dou Xiaowei

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