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China's Aluminum Prices Are At A High Level In The Past 6 Years, And Overseas Electrolytic Aluminum Market Is In Short Supply
Aug 29, 2017

China's aluminum prices are at a high level in the past 6 years, and overseas electrolytic aluminum market is in short supply

With China's electrolytic aluminum to further promote the production capacity, aluminum, aluminum, innovation, high. Since August 9th, 16000 yuan / ton, the current aluminum prices basically maintained in the past 6 years since the new high position.

In August 28th, the Shanghai aluminum contract fell 1.15% to 16365 yuan / ton. But this price has risen by about 23% since the beginning of 2017, compared with an increase of nearly 52% in early 2016. As China's aluminium price rises, some agencies point out that the overseas electrolytic aluminium market is in short supply.

Followed by steel, electrolytic aluminum in 2017 officially opened the curtain on the rectification of the industry. In April 12th, the national development and Reform Commission, the Ministry of land and resources, Ministry of environmental protection, four ministries jointly issued the "notice to clean up and rectify the electrolytic aluminum industry, illegal projects work of the special action plan" (the change of industry 2017 Document No. 656, hereinafter referred to as No. 656).

No. 656 civilization mentioned that the special action for the rectification should be completed within 6 months. The object of the cleanup is the construction and construction of the electrolytic aluminum project from 2004 to May 2015. And within the scope of the rectification of illegal production capacity, accounting for more than 10% of the current national aluminum production capacity, great impact on the market.

In addition, before the text of 656, another regulatory policy has been in the first to stimulate aluminum prices. In February 2017, the State Environmental Protection Department, the national development and Reform Commission, Ministry of Finance and the National Energy Board four departments, with Beijing, Tianjin, Hebei, Shanxi, Shandong, Henan six provinces jointly issued the "people's Government of Tianjin and surrounding areas of air pollution prevention and control plan" in 2017. The scope of the work programme covers Beijing, Tianjin and air pollution transmission channels, a total of 2+26 cities.

Among them, electrolytic aluminum and its supporting industries are included in the output of key industries. Heating season output measures explicitly mentioned above throughout the heating season of aluminium electrolysis cell number by limiting the production of 30%, production plan; alumina enterprises limited production of about 30%, with the production line; carbon enterprises reach special emission limits, all production, achieve special emission limits, limiting the production of more than 50%, in the production of line gauge.

At that time, industry analysis, "2+26" city to run the electrolytic aluminum production capacity of about 12 million 400 thousand tons / year, total operating capacity of 33%; the operation of alumina production capacity of about 25 million 100 thousand tons / year, accounting for 36% of total operating capacity; aluminum carbon run production capacity of about 8 million 300 thousand tons / year, accounting for 43% of total operating capacity. The winter heating season began in October, ending in March of the following year, a total of 6 months.

It is worth mentioning that, since August 9th, the rapid rise in aluminum prices until the break 16000 yuan / ton mark, and the recent actual situation of leading enterprises shutting down production capacity.

Reported in August 8th, the Shandong provincial government and other 9 departments issued instructions before the end of July, Shandong province Wei Bridge Venture Group (hereinafter referred to as "Wei Qiao") and letter group (hereinafter referred to as the "letter") illegal construction of electrolytic aluminum production capacity of 3 million 210 thousand tons, will be shut down before the end of July. Among them, the Wei bridge illegal completion of electrolytic aluminum project 5, illegal production capacity of 2 million 680 thousand tons; letter issued illegal production capacity of 530 thousand tons. The two companies shut down the illegal production capacity, accounting for more than 7% of the country's total capacity.

Then in August 21st, the Ministry of environmental protection, the national development and Reform Commission, Ministry of industry and information technology, Ministry of public security, the Ministry of finance, Ministry of housing and urban construction, the Ministry of transport, the State Administration for Industry and commerce, quality inspection administration, Energy Bureau, Beijing municipal people's government, Tianjin Municipal People's government, the Hebei Provincial People's government, the Shanxi Provincial People's government issued jointly the "Beijing Tianjin and surrounding areas 2017-2018 comprehensive treatment of autumn and winter air pollution crucial action plan".

Compared to the aforementioned program released in February, involving the non-ferrous industry sector to increase another, namely non-ferrous recycling industry smelting process, heating season limited production 50%.

In addition, the electrolytic aluminum production capacity policy continues to tighten. In August 23rd, the State Council executive meeting held, to take effective measures to ensure the completion of this year to resolve overcapacity, steel and coal disposal zombie companies and poor governance enterprises work tasks, reducing production to promote the thermal power, electrolytic aluminum, building materials and other industries, strict control of new capacity. The news came out, the night disk aluminum prices rose more than 2%, and then new highs.

It is worth mentioning that, as China's aluminum prices continue to rise, the international market is feeling the pressure of supply shortage. According to the report of overseas securities Huatai nonferrous group, electrolytic aluminum has been in short supply in the state, with the Chinese supply side reforms, the world may will enter the stage of shortage, then there may be LME (London Metal Exchange) and the same tendency. Over the past 3 years, overseas electrolytic aluminum is oversupply status.

While aluminum prices rise, the industry is also concerned about another phenomenon, that is, the continued high inventory of electrolytic aluminum. According to my "colored network" statistics, in August 28th, the country's major markets for electrolytic aluminum inventory of 1 million 524 thousand tons, the statistical data at the beginning of this year was 363 thousand tons. This means that, this year, China's electrolytic aluminum inventory has actually increased by more than 3 times.

However, under the general trend of production, the impact of high inventory does not seem to appear. JP Morgan analyst recently pointed out that although this year China aluminum inventories increased more than 3 times, but the supply side reforms have well supported the aluminum, aluminum prices are expected in the fourth quarter will continue to rise to $100 a tonne speed.

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