Supply and demand mismatch alumina prices may fluctuate upward

Table 1: Comparison of alumina production in 2021 and 2020 (unit: 10,000 tons)
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Figure 1: Comparison of national electrolytic aluminum production between 2021 and the first half of 2020 (unit: 10,000 tons)
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Table 2: Comparison of Supply and Demand in North and South Regions (Unit: 10,000 tons)
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In the first half of 2021, the alumina market experienced a trend of contrast between expectations and reality. At the beginning of the year, the market’s expectations of the alumina market in 2021 were not ideal, and market participants’ expectations were relatively consistent. New production capacity was put into production one after another, and the pattern of oversupply was irreversible. , The downstream electrolytic aluminum is profitable, but the production capacity has reached a bottleneck, and there is no new bright spot in demand. Half a year has passed. As of July 13, the alumina triple net price has risen from around 2,320 yuan/ton at the beginning of the year to 2,528 yuan/ton, an increase of 208 yuan/ton, under the influence of many factors. Unilateral rise in the market.
Production growth in the first half of 2021 as planned
But there is regional imbalance
From the data in Table 1, we can look at the growth of output from two perspectives. The first is relative growth. That is, the first half of 2020 is the most severe period of the epidemic in China, and alumina production will decline due to the impact of the epidemic. Then even if oxidation occurs in 2021 There is no new production capacity for aluminum, and there is a high probability that the output will increase based on 2020; the second is absolute growth, that is, in the first half of 2021, there will be new production capacity and the resumption of old equipment in the north and south regions, representing companies such as Shanxi In addition, the output of alumina in Guangxi has increased significantly. Compared with the same period last year, the increase in Guangxi accounted for 62% of the total growth in the southern region in the first half of the year. Adding alumina is still concentrated in the southern region.
In terms of imported alumina, domestic alumina imports will be relatively stable in 2021. From January to May, net imports reached nearly 1.1 million tons, of which 634,000 tons were imported in the northern region. The overall alumina imports in the first half of the year are expected to be 132 tons. About ten thousand tons.
In summary, in the first half of 2021, the national apparent demand for alumina reached approximately 38.29 million tons, with an import dependency of about 3.5%, and the apparent demand in the northern region reached 28.13 million tons, with an import dependency of 2.7%.
Continuous high-load operation of electrolytic aluminum device
With the effective control of the epidemic in China, the electrolytic aluminum market has emerged from a wave of unilateral bull market. What is even more rare is that after long-term capacity control, the output of electrolytic aluminum is within the expected range, downstream demand continues to grow, and industry profits have been in the past. It continues to operate at a high level throughout the year, reaching a maximum of 6,000 yuan/ton, and currently it is around 4,000 yuan to 5,000 yuan/ton, which is in the super profit cycle.
Therefore, the high demand of electrolytic aluminum for alumina can be maintained, and the regional bias of demand has also led to a large difference in the price of alumina in the region.
The data in Figure 1 shows that in the first half of 2021, the output of electrolytic aluminum increased by about 1.496 million tons compared with the same period of last year. Yunnan is the key area for the growth of electrolytic aluminum production. Similar to the situation of alumina, the growth of electrolytic aluminum production in the northern region is only because The relative growth caused by the epidemic, while the growth data for the southern region is a combination of relative growth and absolute growth.
Alumina supply and electrolytic aluminum demand
Regional mismatch
It can be seen from the data in Table 2 that there was a regional imbalance in alumina supply in the first half of the year. The supply in the northern region was tight, while the supply in the southern region was ample. This is mainly because my country’s electrolytic aluminum production capacity is still concentrated in the northern region. The increase in aluminum demand can also explain why some Guangxi alumina cargo travels to the north to meet regional demand.
Regional impact of ore supply
In 2021, the supply of domestic mines in Shanxi and Henan is generally unstable. The water seepage incident in the Daixian Iron Mine in Shanxi in June directly led to the suspension of operations in some open-pit mining areas, and the price of domestic ore showed a certain increase.
According to Aladdin’s data, from January to June this year, domestic alumina manufacturers’ ore inventory destocking was about 48 days, an increase from 45 days in the same period last year. In June, due to environmental protection and other factors, alumina production The manufacturer’s ore dechemical inventory was 38 days, which was 2 days lower than the 40 days in May.
Outlook for the alumina market
From the supply side, in July, the alumina market had a short period of market divergence at around 2,500 yuan/ton. With the tight supply of raw ores in Shanxi and the news that mainstream suppliers in Shandong suddenly purchased alumina in the market According to market feedback, the spot supply in Shandong and Shanxi continued to tighten in July. Due to maintenance and temporary shutdown of some devices, the output loss in Shanxi is expected to be between 350,000 and 400,000. Ton. In addition, in July, one of the major suppliers in Shandong region plans to conduct a 15 to 20 day maintenance of a large alumina plant, which significantly reduces the amount of on-site takeaways. Due to the supply of ore and power curtailment in Henan, some small factories were forced to cut production. The monthly output loss is expected to be 60,000 to 70,000 tons. Shandong, Shanxi, and Henan are expected to lose 410,000 to 470,000 tons of alumina output in July.
From the demand side, according to Antaike data, nearly 1.4 million tons/year of electrolytic aluminum production capacity will resume production in the second half of the year. Qinghai Haiyuan Energy Aluminum Co., Ltd. plans to resume production on July 8, with a production scale of 240,000 tons/year; Shanxi Zhaofeng Aluminum will also start its long-shutdown 80,000 tons/year production capacity in July; in addition, Zhongwang Group also plans to resume the second phase of production in the third quarter. The phased production cut in Yunnan due to power shortage will also gradually resume in July.
From the perspective of imports, the overall performance of the alumina import market is stable. In the second half of the year, the import volume may show a growth trend as demand increases, but the change in ocean freight is also a key factor affecting the alumina import volume.
Therefore, although there are several sets of alumina plants planned to be put into production in the second half of the year, the new plants are concentrated in the southwest region, and the current time is undetermined. The overall supply of alumina throughout the year is relatively balanced, but the regional imbalance is difficult to break unless the price difference between the north and the south Higher than the north-south freight rate, the north-south arbitrage window opens, and a large amount of goods from the south are shipped to the north to balance demand. Otherwise, the supply of alumina in the north will generally tighten in the second half of the year. It is necessary to continue to pay attention to the start of large factories and the quantity of imported goods to balance the demand In the second half of the year, the price is expected to run in the range of 2,400 yuan to 2,900 yuan/ton.

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