China Aluminum: clean up illegal production capacity into the storming stage, the most benefit from the faucet

Event: alumina prices rose from 2760 yuan / ton a week ago to 2880 yuan / ton.

Supply side reform in an orderly manner, cleaning up the production capacity of electrolytic aluminum into the crucial stage. In early August, Shandong province ordered to shut down the Shandong Wei bridge and letter of illegal electrolytic aluminum production capacity of 3 million 210 thousand tons, plus the previously ordered Xinjiang shut down the illegal construction capacity of about 2 million tons; we expect to have 5 million tons of production capacity in production this year. At present, electrolytic aluminum production capacity is about to enter the special inspection stage (September 15th), the implementation is expected to exceed expectations.

Air quality is not optimistic, heating season is expected to limit production than expected. According to rivers statistics, "2+26+3" city involving electrolytic aluminum production capacity, accounting for more than 30% of the country's total production capacity, involving alumina production capacity, accounting for more than 40% of the country's total capacity. Tianjin 13 city excellent first half of the average number of days the proportion of 50.7%, down 7.1%, the decline in air quality may have prompted the government to increase efforts to limit production of electrolytic aluminum electrolytic aluminum production capacity, we expect the superposition effects of heating Xianchan policy shut down illegal production capacity, by the end of the electrolytic aluminum production is expected to decline by more than 10% runs.

Alumina or supply and demand inflection point. The industry level, the first half of the global alumina production capacity of 61 million 230 thousand tons, consumption of 60 million 770 thousand tons, the supply and demand of the weak equilibrium; domestic alumina production capacity of 34 million 690 thousand tons, the demand for 36 million 660 thousand tons, 1 million 550 thousand tons of imports, imports nearly 2 million tons to remove the gap, the current domestic market mainly by the import regulation, supply and demand is still slightly short, to form a strong support the price of alumina.

Their advantages, had no effect on settlement of electricity Fund + "2+26+3". (1) present a comprehensive clean-up power plant arrears of government funds are gradually advancing, the proportion of company owned electricity is only 37%, and after all the compliance approval, the corresponding power funds have been paid in full, not affected by the policy. (2) the policy of limiting production in the heating season has no influence on the electrolytic aluminum and carbon products of the company. The production capacity of alumina is only about 720 thousand tons.

Leading advantages are obvious, and most benefit from supply side reform. By the end of 2016, the company's alumina production capacity was about 15 million 960 thousand tons. After meeting its own demand, some of the products could be sold abroad. Electrolytic aluminum production capacity was 3 million 940 thousand tons, second only to China's macro bridge. Benefit from the volume and price of alumina, the first half of 2017 the company's revenue grew 83%, owned by the parent net profit rose 1006%, the second half of the electrolytic aluminum plate is expected to erupt, as a leading company, adequate capacity, resource self-sufficiency rate is high, the performance of elasticity significantly.