SDIC Essence Futures: Limited production of electrolytic aluminum overweight “aluminum” to a new high

It is reported that Guangxi region will adopt a new round of electricity curtailment measures. On Monday, the most affected ferroalloy daily limit, Shanghai Aluminum continued to rise and once exceeded the 2008 high of 21,500 yuan.

Documents transmitted on the Internet over the weekend showed that the Guangxi region will hold a deployment meeting to strengthen the dual control of energy consumption, and it is proposed that the output of each electrolytic aluminum plant in September shall not exceed 80% of the average monthly output in the first half of 2021. The output of alumina enterprises in September shall not exceed 50% of the average monthly output in the first half of 2021. The company has not yet received the notification, and the specific implementation is yet to be determined.

The electrolytic aluminum in Guangxi has built a production capacity of 2.5 million tons, accounting for approximately 5.5% of the total domestic production capacity. Nearly full production before August, operating capacity accounted for 6.5% of total domestic operating capacity. At the beginning of August, the Guangxi Power Grid had asked the electrolytic aluminum plants in the province to drop 30% of the electricity load. Subsequently, Baikuang, Yinhai, and Xiangji, which used network power, reduced production by 10%-20%, and the total scale was about 200,000 tons. According to this document, the impact of companies that have previously reduced production is limited. Xinfa, Hualei, and Debao using self-provided electricity will implement a production reduction of about 200,000 tons with a total production capacity of 1 million tons. Therefore, the scale of production reduction involved in this document is only equivalent to less than 1% of the current domestic operating capacity, but it has played a role in adding fuel to the fire under the condition of frequent production restrictions, and has aggravated the expectation of power shortage. The resumption of production of 10,000 tons of production capacity is far away, and the power problem may face greater challenges this winter.

After the National Development and Reform Commission’s press release this month gave another warning to provinces where energy consumption will not drop but increase in the first half of the year, Xinjiang, Ningxia, Qinghai, Guangxi, Inner Mongolia and other places have responded to varying degrees. Last week, Xinjiang’s Changji Prefecture Development and Reform Commission issued a document requiring strict control of electrolytic aluminum production in accordance with compliance indicators. In the early stage, over-production enterprises faced a reduction in output, and local monthly output fell by about 20,000 tons. The Qinghai Province Electrolytic Aluminum Plant received the notification document that due to the imbalance in the supply and demand of the Xining power grid, it is required to make preparations for orderly use of electricity. The specific measures are unknown. The Ningxia Energy Conservation Office interviewed the four district leaders of Ningdong Energy and Chemical Base, Shizuishan, Zhongwei, and Wuzhong City, which are the first-level warning of energy consumption dual control, and put forward rectification requirements. The local electrolytic aluminum may also reduce the load.

– The cost of electrolytic aluminum has risen significantly –

Recently, the complete cost of electrolytic aluminum has risen to 15,000 yuan along with the significant increase in the cost of alumina, anodes and electricity. Last week, the average domestic alumina price accelerated again by nearly 100 yuan, and the increase was close to 300 yuan in the past month. Both domestic and overseas production capacity has been cut and stopped, superimposed cost rises, and tight spot prices have continued to increase prices. The operating capacity of alumina in Guangxi is 12 million tons, accounting for about 16% of the country. If production is reduced by 50% in accordance with the document, it will have a greater impact than electrolytic aluminum, which may further accelerate the rise of alumina.

Since the beginning of this year, the price of grid electricity in various regions has increased to varying degrees. Last Friday, the National Development and Reform Commission issued a notice on improving the step-by-step electricity price policy for the electrolytic aluminum industry. , The ones that have been implemented and organized should be cancelled immediately. Both the cost of raw materials and electricity are facing a significant upward trend.

– Powell’s speech at the annual meeting of global central banks assists commodities –

The Fed Chairman’s speech at global central bank meetings has always been regarded as a weather vane for the Fed’s policy, especially at the current policy turning point. Last Friday, Powell said that inflation is temporary. It may be appropriate to start reducing the pace of asset purchases this year, but reducing the time and speed of asset purchases will have nothing to do with signalling the timing of interest rate hikes.

Recently, at least six senior Federal Reserve officials have made hawkish statements. Powell’s speech was interpreted by the market as a pigeon, to a certain extent because it was more moderate and cautious than other officials’ views. Powell did not issue a clear signal on Taper, which lowered the market’s expectations for the details of Taper announced at the September interest rate meeting. After the speech, the US dollar plunged and commodities generally strengthened. At present, the global commodity bull market has entered a stage of shock and differentiation. The bulls are focusing on supply-constrained varieties. Non-ferrous Chinalco will inevitably be favored by funds.

The direction of the Fed’s currency normalization is clear, and the rhythm remains variable. In the context of the epidemic, it still relies on the support of economic data such as inflation and employment. This week’s non-agricultural data may still cause market expectations and fluctuations.

– Fundamentals support Shanghai Aluminum to maintain its strength –

On the whole, dual energy consumption control and power curtailment tend to be stricter, and it is difficult to recover from the supply side. The off-season on the consumer side is not short. Even if the peak season maintains its current performance, there will still be gaps. Last week, the State Reserve Bureau announced that the third batch of dumped aluminum ingots was only 70,000 tons lower than expected and the previous batch of 90,000 tons. The dumped reserves were not enough to make up for the growing gap. The import window will be opened in stages, and the inventory is in recent years. The low level during the same period and the possibility of a lower decline. There are fewer negative factors for Shanghai Aluminum, and it is still easy to rise but not fall even when the policy continues to increase, and maintain the long-term thinking. After Shanghai Aluminum broke through the 2006-2008 intensive trading zone, the upper resistance levels corresponded to the three highs of 21,500 yuan, 22700 and 24600 yuan in 2006-2008. However, the current market is overheating, and Shanghai Aluminum is wary of stampede or other regulatory measures after the sharp rise.

SDIC Essence Futures

Senior Analyst Liu Dongbo Investment Advisory Number: Z0015311

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