In July, Shanghai aluminum prices experienced a sustained decline in the beginning of the month, after showing a rebound in the middle of the month. Lun aluminum prices continued the bottom shock finishing market.

Since July, the spot trend of domestic aluminum ingots has been basically synchronized with the futures price. The spot price of A00 aluminum in the Changjiang non-ferrous metal market rose from 19,230 yuan/ton at the end of June to 18,020 yuan/ton on July 27, a monthly decrease of 6.29%. The London LME spot aluminum price is also basically the same as the LME disk, showing a trend of bottoming and shock, and the overall is relatively weak. As of July 27, the spot price of aluminum in London was US$2,390.5/ton, a monthly decrease of 0.27%.

According to data from the General Administration of Customs, in June, my country's electrolytic aluminum exports were about 66,232.2 tons, down 89.8% month-on-month and up 87 times year-on-year; electrolytic aluminum imports were about 28,502.8 tons, down 23.6% month-on-month and 82% year-on-year. In the first half of the year, my country's total imports of electrolytic aluminum totaled 197,200 tons, a year-on-year increase of 59.4%. In June, the export volume of unwrought aluminium profiles for doors and windows and Aluminium Extrusion Profile was about 607,400 tons, down 10.2% month-on-month and up 33.7% year-on-year. In the first half of the year, the export volume of unwrought aluminum and aluminum products was 3.509 million tons, a year-on-year increase of 34.1%. In June, the export of alumina was 189,200 tons, an increase of 0.21% month-on-month and a year-on-year increase of 361.8%; the imported alumina was 138,500 tons, a month-on-month increase of 93.79% and a year-on-year decrease of 49.63%.

Electrolytic aluminum production is expected to continue to grow

Production capacity and operating rate have increased

According to SMM data, as of the beginning of July, the domestic electrolytic aluminum operating capacity reached 41.05 million tons, the effective built capacity was 44.57 million tons, and the operating rate of electrolytic aluminum enterprises was about 92.1%.

In July, Gansu Liancheng Aluminum Company, Guangxi Geely Baikuang Aluminum Company, Guangtou Yinhai Aluminum Company and other projects resumed production steadily, and Gansu Zhongrui Aluminum Company, Guangyuan Zhongfu Aluminum Company and other newly put into production projects also The operation was put into operation as planned, and the domestic electrolytic aluminum operating capacity continued to grow. By the end of July, the domestic electrolytic aluminum operating capacity reached a high of 41.4 million tons. In July, domestic production of electrolytic aluminum reached 3.48 million tons, a year-on-year increase of 6.2%.

In the first half of the year, the overall surplus of alumina was 426,000 tons. At present, the alumina market is in the stage of replacing old and new production capacity, and new supply to the market and production reduction and production stoppage may occur at the same time. Earlier concerns about the possible large excess of alumina production capacity eased.

Aladdin data shows that the production capacity of electrolytic aluminum will continue to decrease from the second half of 2021, and will bottom out in November 2021. The double control of energy consumption and the production reduction caused by power shortage that plagued 2021 will also gradually recover from the end of 2021. Since the beginning of this year, domestic coal prices have been regulated in an orderly manner, and the electricity cost of electrolytic aluminum plants has been guaranteed to a certain extent. Although the electricity discount for domestic electrolytic aluminum plants has been cancelled, normal production can be effectively guaranteed. In addition, the production of aluminum plants in Europe was reduced in the early stage, but the production capacity of electrolytic aluminum did not decrease further.

According to Baichuan Information data, as of August 4, my country's electrolytic aluminum production capacity (calculated by devices with production capacity) was 47.097 million tons, and 41.348 million tons were started. This year, my country's electrolytic aluminum production has been reduced by 950,000 tons. The total production scale of electrolytic aluminum in my country is 4.102 million tons, of which 2.817 million tons have been resumed, 1.285 million tons are to be resumed, and 1.065 million tons are expected to be resumed within this year. my country's electrolytic aluminum has a new production capacity of 3.105 million tons that has been completed and is to be put into production, and 1.66 million tons have been put into production.

Judging from the immediate profit changes of electrolytic aluminum plants, 2021 was a lucrative year for electrolytic aluminum plants, but this situation came to an abrupt end in October last year. In the second quarter of this year, the profits of electrolytic aluminum enterprises shrunk sharply. Recently, due to the continuous decline of aluminum prices, the profits of electrolytic aluminum enterprises have also turned from positive to negative. According to the author's calculations, at present, about a quarter of the aluminum plants in the whole market are at the break-even line or have already lost money. As of July 27, the complete cost of the self-provided aluminum plant was about 18,161 yuan/ton, and the immediate profit was a loss of 141 yuan/ton; the complete cost of the on-grid aluminum plant was about 19,387 yuan/ton, and the immediate profit was a loss of 1,367 yuan. /Ton.

According to the statistics of Baichuan Yingfu, as of August 4, the domestic alumina production capacity was 96.7 million tons, the production capacity was 85.8 million tons, and the operating rate was 88.73%.

Inventory of aluminum ingots is maintained to support aluminum prices

Since the beginning of this year, the social inventory of aluminum ingots has decreased first and then increased. This year's accumulation of electrolytic aluminum is significantly lower than in previous years. Affected by the epidemic, from March to April, which should have been the traditional peak season, companies were forced to suspend production and stop production for delays, and the inventory did not go to the warehouse but accumulated slightly. The production and transportation of raw materials in processing enterprises have also been affected to a certain extent, and the inventory of aluminum ingots has accumulated in the peak season. In May, with the improvement of the domestic epidemic situation and the hoarding of goods after the sharp drop in aluminum prices, the purchase demand for aluminum ingots increased again, and the inventory also entered the destocking cycle again.

At present, although the price of electrolytic aluminum is weak, the inventory continues to deplete. In the second half of the year, especially from July to August, many companies began to take summer vacations to prevent and cool down, and the inventory may be depleted in anti-season. In addition, with the rise of industrial parks, the supply of aluminum water will gradually squeeze the amount of ingots, which will affect the long-term focus of social inventory of aluminum ingots.

The real estate industry continues to slump

Last year, the real estate industry declined under the influence of policy regulation. However, due to the relatively high new construction data of enterprises in the past few years, there is still strong resilience, especially in terms of aluminum demand. The operating rate of construction aluminum profiles in the first half of the year was significantly higher than that in the second half of the year. In the first quarter of this year, the real estate market demand continued to bottom out due to the lack of relaxation of the real estate control policy and the impact of the epidemic. However, when the epidemic improves, it will boost the demand for aluminum materials to a certain extent. It is expected that the demand for aluminum will show a trend of low before and high this year.

According to the latest data from the National Bureau of Statistics, in the first half of the year, the cumulative output of aluminum profiles in my country was 29.994 million tons, a year-on-year decrease of 2.8%. In the first quarter of this year, affected by the traditional off-season and the epidemic, the output of aluminum products dropped significantly.

Automobile production and sales rose sharply

In June, my country's new energy vehicle production and sales increased rapidly, and the market penetration rate of new energy vehicles continued to rise. In the first half of the year, the cumulative penetration rate of new energy vehicles reached 21.6%. In the past year, the cumulative market penetration rate has steadily climbed to 18.9%, and the market recognition and competitiveness of new energy vehicles has been continuously enhanced. Since June, my country's auto industry has basically recovered from the impact of the previous epidemic. It is expected that in the second half of this year, the automobile industry will maintain a good growth momentum due to the rotation of the industrial cycle and the support of policies.

In 2021, my country's aluminum alloy production will maintain a relatively good growth trend, and this year's performance is still dazzling. In June, the national aluminum alloy output was 1.044 million tons, an increase of 11.2% year-on-year. In the first half of the year, my country's aluminum alloy output was 5.556 million tons, a year-on-year increase of 8.9%. In the future, with the growth of automobile sales, the demand for aluminum for automobiles will continue to support the production of aluminum alloys.

In the first half of the year, domestic electrolytic aluminum projects resumed production and new production capacity gradually increased, and the market supply increased, but the output growth was relatively flat. In July, some electrolytic aluminum projects started construction and will continue to grow in the future. From the perspective of demand, the start-up situation of downstream processing enterprises has been differentiated. The operating rate of upstream profiles and strips used in real estate remained low.

At present, in the off-season of traditional consumption, some companies have planned to take a holiday, and it is difficult to see good demand on the demand side. From the perspective of exports, as the ratio of Shanghai aluminum has fallen again, the import window of electrolytic aluminum has been closed again, which is conducive to exports. In addition, foreign demand is poor, resulting in a decrease in the number of orders for export-oriented enterprises. The social inventory of aluminum ingots has been accumulating slightly for two consecutive weeks, which has also formed a certain pressure on aluminum prices.

Recently, although the aluminum price has rebounded, the spot discount has continued to expand, which also shows that the downstream enterprises are less willing to receive goods, and the overall market sentiment is hard to say optimistic. At present, the Shanghai aluminum plate lacks a strong fundamental drive. Therefore, it is greatly affected by macro and emergencies, and the uncertainty of macro factors is strong, and it is difficult for aluminum prices to form a trending market.