Zhitong Financial APP learned that aluminum prices have continued to rise in shock since late February. On April 15, domestic spot aluminum prices once refreshed a 22-month high of 20750 yuan / ton. On April 24th, the latest price of spot aluminum was 20110 yuan / ton, up 7% from the February low.Jackpotyantra.71%. A number of securities firms published research reports that domestic and foreign aluminum prices, driven by the recovery of demand in the downstream industry, are in a rising trend and are less likely to fall sharply in the short term. At the same time, the energy cost abroad is high and the domestic production capacity is backward, so it is difficult to expand the supply of electrolytic aluminum at home and abroad in the short term.
On April 14, it was reported that the United States and Britain had announced new trading restrictions on Russian aluminum, copper and nickel, banning the London and Chicago exchanges from accepting the three new Russian-produced metals, and banning imports of the three metals. Or affected by the news, in addition to copper, which has risen sharply before, LME synthetic aluminum and nickel all rose sharply, and LME aluminum once rose nearly 10% on the day. Domestic shanghai aluminum 2404 has also reached an one-year high of 21175 yuan / ton, and shanghai aluminum has risen by about 20% each from the bottom in June 2023, making it one of the stronger industrial metals.
On the supply side, aluminum production is mainly distributed in China, Indonesia, Russia, Canada and so on, of which China accounts for nearly 60%. However, China's electrolytic aluminum production capacity has expanded close to the ceiling. According to Fitch estimates, China's electrolytic aluminum production capacity is expected to be about 45 million tons, while MYsteel shows that by the end of 2023, China's electrolytic aluminum production capacity is about 44.7 million tons. At present, the capacity of electrolytic aluminum is close to the ceiling target. There is also a lack of increment in the release of new capacity. Soochow Securities estimates that China's electrolytic aluminum production capacity will increase at an annualized rate of 1.5% between 2024 and 2025, with a limited increase in total supply in the future.
From the production of electrolytic aluminum, China is mainly divided into thermal power, hydropower aluminum, hydropower aluminum mainly in Yunnan and Guangxi. However, hydropower has obvious seasonality, and the output of electrolytic aluminum fluctuates greatly due to the low water period. Under the influence of the difference of seasonal water supply, the periodic power production reduction of large industrial power users in Yunnan has been nearly normal in recent years. The resumption of production began in Yunnan in March, three months earlier than last year, but the pace of resumption is relatively slow and the landing situation still needs to be observed. The impact of supply-side impact on aluminum prices may gradually appear.
On the demand side, the downstream of electrolytic aluminum is mainly used in construction, transportation and new energy fields represented by new energy and photovoltaic. In 2024, the pulling role of the three major areas will be divided, and the pulling role of buildings will be reduced. New energy vehicles and photovoltaic will also maintain rapid growth. In addition, the "trade-in" scheme for consumer goods and the peak consumption season will bring potential benefits. These factors will also help push up aluminum prices further.
From January to March 2024, domestic consumption of electrolytic aluminum reached 10.68 million tons, an increase of 11.9 percent over the same period last year, according to Shanghai Nonferrous Network. In terms of terminal consumption, according to the data of the National Bureau of Statistics, the China Automobile Association, Wind, and the General Administration of Customs, from January to February, the completed area of domestic real estate decreased by 20.2%, the production of cars and new energy vehicles increased by 8.1% and 28.2%, and the newly installed photovoltaic capacity increased by 87.9%.
A few days ago, Goldman Sachs pointed out that similar to copper, the global aluminum market will turn into a sustained supply shortage from the second quarter, and it is expected that there will be a gap between supply and demand of 7.24 million tons in the global aluminum market this year. This trend will support the LSE aluminum price of $2600 / ton by the end of this year. In this context, Goldman Sachs stressed that the strong performance of the Chinese market, the recovery of spot aluminum demand in Europe and the improvement of terminal demand trends in the United States are the three most noteworthy developments in the current aluminum market.
Citic Securities Research News said that the current electrolytic aluminum demand toughness significantly exceeded expectations. Construction profile construction has not declined significantly, industrial profile and cable construction is at a new high level in the same period in recent years, plate, strip and foil production is slightly increased compared with the same period last year and is expected to continue to improve. The explicit inventory decline under the short-term supply shock verifies the demand resilience. It is expected that although the supply of electrolytic aluminum will still increase this year, the growth rate will move down. To sum up, it is expected that the domestic electrolytic aluminum industry will show a tight balance during the year, and aluminum prices and profits per ton of aluminum will remain high.
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China Hongqiao (01378): in mid-April, Debang Securities released a research report that maintained China Hongqiao's "buy" rating and expected to achieve a net profit of 117,129,13 billion yuan in 24-26 years. The company released its 2023 annual report. During the reporting period, the company achieved a total operating income of 133.6 billion yuan, an increase of about 1.5% over the same period last year, and a net profit of 11.5 billion yuan, an increase of about 31.7% over the same period last year. China Hongqiao's current cost side will be accompanied by a decline in coal prices, while 23 years of excellent performance and higher dividend yield.
Aluminum of China (02600): in early April, Citigroup released a research report saying that it maintained Chinalco's "buy" rating and adjusted the 2024 Universe 25 earnings survey by + 53% and-5% to 9 billion and 11.3 billion yuan, reflecting rising aluminum production and higher alumina price forecasts. at the same time, the aluminum price forecast for 2025 was lowered. The profit is expected to be 13.8 billion yuan in 2026, with the target price raised to HK $7.88. The bank believes that due to the high demand for aluminum for solar installations and new energy vehicles, and the continuing tight demand, the price of aluminum will remain high in the mainland for some time, driving the profit margins of the aluminum industry.
Xingfa Aluminum (00098): recently announced its results for the year ended December 31, 2023, the group achieved a turnover of 17.353 billion yuan (the same as the unit below), an increase of 2.48% over the same period last year; profit attributable to equity shareholders of the company was 804 million yuan, an increase of 75.67% over the same period last year; earnings per share are 1.91 yuan, and a final dividend of HK $0.64 per share is proposed. The increase in turnover was mainly due to an increase in sales orders during the year, the announcement said. In the current year, sales of construction aluminum profiles increased by 9.2% to about 622700 tons (2022: 570000 tons). At the same time, sales of industrial aluminum profiles fell 5.1 per cent to about 126200 tons (2022: 133000 tons) this year.