The puzzle of supply and demand of aluminum under supply side reform
Recently, aluminum prices rose sharply after after the start of adjustment, but the main reason is the increase in the price of aluminum market to realize the second half of the domestic aluminum production capacity will be greatly enhanced, it sends a clear message to the market, the aluminum supply side reforms are being implemented progressively, electrolytic aluminum production capacity shut down will be strictly enforced. The key question is whether the trend of aluminum prices will continue, how much is the current adjustment rate?
First of all, from the supply, we can estimate the second half aluminum production capacity and impact shut down at the end of September 2+26 will bring the city policy. In addition to shut down Shandong Province before the end of July 3 million 210 thousand tons of illegal production capacity, Xinjiang, Inner Mongolia, Guangxi and other regions and about 1 million 220 thousand tons of illegal production capacity has not yet closed. In June this year, the domestic electrolytic aluminum production capacity of 38 million 363 thousand tons, assuming the July production capacity has not yet been 38 million 360 thousand tons, then enter August, operating capacity will be reduced to 35 million 150 thousand tons. To March this year released "Tianjin and surrounding areas of air pollution prevention and control plan" in 2017 the city of 2+26 area, 3 city and Henan province to expand around the city, a total of 31 within the scope of the operation involves electrolytic aluminum production capacity of 13 million 110 thousand tons of alumina production capacity, operation involved 34 million 150 thousand tons. Here comes to the end of July Shandong Wei bridge and Shandong letter total production of 3 million 210 thousand tons is started with the end of September heating season illegal production cut 30% overlap and the specific calculation on different. If Shandong is cut after 31 city still with 30% remaining running capacity production calculation, so from the beginning of October, the domestic aluminum production capacity will reduce the operation of 2 million 970 thousand tons, 32 million 180 thousand tons. In terms of 13 million 110 thousand tons to calculate the heating season production 3 million 930 thousand tons, Shandong Wei bridge in July 24th has been discontinued 900 thousand tons, Shandong issued a letter of 530 thousand tons, 3 million 930 thousand tons in the minus 1 million 430 thousand tons, 2+26 city policy involves the reduction in production capacity of 1 million 500 thousand tons, so the beginning of October to run the domestic electrolytic aluminum production capacity of 33 million 650 thousand tons.
The analysis for shutting down part, then consider the new capacity and index replacement part, expected domestic production capacity 4 million 930 thousand tons, the first half of the year has added 2 million tons, 2 million 930 thousand tons of surplus, which is only about 1 million 60 thousand tons can be put into production, which is currently a clear index is 200 thousand tons, 400 thousand tons to the late replacement index. In addition to new capacity, in August 10th, the Henan provincial government sold to Inner Mongolia, Tongliao enterprises 207 thousand tons of electrolytic aluminum production capacity indicators. According to the above capacity index and the possibility of slow speed operation assumption, and assuming that Mongolia replacement capacity has been included in the current operating capacity, and to the current 85.5% average operating rate, October will add 170 thousand tons of production capacity of 510 thousand tons of new operation, in November, December increased by 906 thousand tons.
To resume production, has the largest production capacity of 390 thousand tons of production in the second half of the year, according to the assumption of relatively harsh conditions, until the resumption of production capacity increased by 390 thousand tons in December.
Above, we can expect the second half of the month of operation capacity, in July is 38 million 360 thousand tons, 35 million 150 thousand tons in August, September was 35 million 150 thousand tons, 32 million 550 thousand tons in October, November was 32 million 890 thousand tons, 33 million 676 thousand tons in December, is expected in the second half of electrolytic aluminum production of about 17 million 250 thousand tons.
As for the import and export, due to WBMS since the beginning of the year released data showed that the global market this year will be a shortage of supply, the latest 1-6 months of the global primary aluminium market shortage of 479 thousand tons, in order to calculate the annual global shortage of 960 thousand tons, domestic imports are hard to increase.
Supply, the first half of electrolytic aluminum production of 16 million 617 thousand tons, net imports of about 70 thousand tons, you can expect the current annual output of 33 million 870 thousand tons. The consumer side is expected to be more consistent, about 35 million tons or so, the annual consumption shortage is expected to be about 1 million tons. But the specific analysis, the first half of the global China except aluminum consumption is 14 million 600 thousand tons, nearly 3 years China aluminum consumption and the proportion Chinese global aluminum consumption averaged 1.154, can be estimated in the first half of domestic aluminum consumption is about 16 million 850 thousand tons, indicating that the basic balance between supply and demand in the first half of aluminum, shortage will be mainly concentrated in the second half especially at the end of September after the beginning of the implementation of the policy of heating.
The aluminum disk, aluminum prices until August 4th in the 12500 - 14850 range of shocks, the bottom 15000 near the support of a strong, but 3 days up to around 16460, rose too fast, the market on Thursday and Friday, the price of aluminum into the rapid rise after the callback period, and on the aluminum supply side reform the market is expected to begin to recover from the shock reason, aluminum platform breaking rate of more than 1600 points, the short term price of aluminum will have 500 points to 1100 points range from stage 16460 high callback, the callback rate is maximum at about 1350, and the most optimistic estimate is that aluminum prices stabilize next Monday. In the long run, if the supply side reform policy is put in place, the aluminum shortage will be more prominent in the second half, and the trend of aluminum prices is still bullish.
As for the supply and demand relationship between electrolytic aluminum and upstream alumina. More than half of the data, the output of alumina is 37 million 220 thousand tons, net imports of 1 million 359 thousand tons of electrolytic aluminum, or for the supply of 19 million 973 thousand tons, and 16 million 616 thousand and 600 tons of electrolytic aluminum production in the first half, alumina is oversupply. In the second half of the year, alumina production capacity to 10 million 240 thousand tons to the city of 2+26, calculated by the June operating capacity of 71 million 930 thousand tons of alumina is assumed to be August operating capacity, equivalent to electrolytic aluminum production capacity of 37 million 240 thousand tons, the corresponding electrolytic operation capacity of 35 million 150 thousand tons, heating discontinued after the beginning of October production capacity of 61 million 690 thousand tons, equivalent to the electrolytic aluminum production capacity of 31 million 940 thousand tons, the corresponding the operation of electrolytic aluminum production capacity of 32 million 550 thousand tons, alumina supply to less than the demand of electrolytic aluminum. The alumina market recently may fall into the round cycle, but with alumina prices, take the initiative to shut down production capacity will be increased, with the end of September, the city will also implement the policy of alumina 2+26