China's primary aluminum demand accounts for more than half of global demand, and the growth rate of demand has fallen from a historical high of 16% in 2013 to a slight negative growth in 2019. According to data, in China's 2018 electrolytic aluminum consumption structure, real estate infrastructure accounted for 31%, transportation accounted for 21%, power equipment accounted for 16%, and packaging containers accounted for 10%.
Inventory: Domestic Inflection Point Reappears, Global Inventory Record Low
As the supply-side reform in 2017 is expected to accelerate the production of electrolytic aluminum plants, the supply far exceeds the demand, resulting in a large increase in inventories to the recent high. In addition, demand did not increase significantly in 2018. In March 2018, domestic inventories reached a record high of 2.286 million tons. Until After March 2019, due to the gradual effect of production reduction in China, the production of new production capacity is lower than expected, and the inventory trend continues to decline. Under the influence of the epidemic since 2020, there has been a significant accumulation of warehouses. However, with the resumption of production and work in China, the post-natal period has gradually improved. At present, domestic aluminum warehouses have dropped to about 635,000 tons, a year-on-year decrease of 25%.
The Demand Field Is Expected to Stop Falling and Achieve Steady Growth at A Low Speed
Post-real estate cycle completion data may continue to converge. The growth rate of development investment is relatively low, and the rate of completion of construction remains stable, and the two are expected to continue to converge. From January to September 2020, the national real estate development investment was 10,348.4 billion yuan, a year-on-year increase of 5.6%, and the growth rate increased slightly. From January to September, the construction area of real estate development enterprises was 8,598.2 million square meters, a year-on-year increase of 3.1%.
In November 2017, the completed area showed negative growth. In the case of real estate development investment and the new housing area maintaining a high growth rate, considering the delivery cycle of about two years, the decline in the completed area has gradually slowed since June 2019, excluding 2020 The epidemic repeated in February, and it is expected that the two are expected to further converge in Q4 in the future, which can bring about a stabilization and rebound in demand for aluminum in the later period.
The packaging market is to undertake plate. Comparing the current consumption structure of the Aluminum industry in China and the United States, it is not difficult to find that the proportion of aluminum consumption in real estate construction in China is much higher than that in the United States, but it is much lower in the field of transportation and packaging. According to the history of the leading industry of aluminum consumption in the United States, it has undergone three changes: construction real estate from 1960 to 1978, packaging and container industry from 1979 to 1993; Most of the time after 1994 is the transportation equipment industry.
During 1970-1993, the aluminum consumption of aluminum cans in the United States rose from about 400,000 tons to 2 million tons and remained stable at the level of 1.6 to 2 million tons, which was very little affected by economic fluctuations. The consumption of aluminum cans in the United States is very common. According to the statistics of The American Aluminum Association, the shipment of aluminum cans in the United States has been stable at the level of 100 billion pieces for many years, and almost the per capita consumption of a can a day, based on the single can 13.28g, which means that the aluminum can material 1.79 million tons, accounting for more than 95% of the demand for aluminum packaging in the United States.
We tend to see a similar shift in China in the future, meaning that China's growth in aluminum demand is in transportation equipment and packaging. What is worth mentioning is the application of aluminum in the field of automobile lightweight and new energy vehicles.
Lightweight and new energy vehicles are important drivers of growth.By 2030, 2035, and 2050, the penetration rate of new energy vehicles in China will reach 20%, 40%, and 50%, and is expected to reach 5.15 million, 10.3 million, and 12.86 million vehicles. New energy vehicles are expected to maintain a high growth rate. At the same time with traditional automobile energy consumption standard of ascension and the requirement of new energy car range, automotive lightweight has become the development trend of new energy vehicles, including the lightweight, car power system lightweight car body, chassis lightweight technology standardization systematic, lightweight materials, typical components, composite technology and efficient preparation of the design of lightweight material components and process simulation technology.
At present, the lightweight materials used in automobiles mainly include high-strength steel, aluminum alloy, magnesium alloy, and carbon fiber composite materials. From the weight reduction effect, the weight reduction effect is increasing, of high strength steel, aluminum alloy, magnesium alloy, and carbon fiber. From the perspective of cost, the cost of high strength steel - aluminum alloy magnesium alloy - carbon fiber presents an increasing trend. Among lightweight automotive materials, aluminum alloy is more cost-effective than steel, magnesium, plastic, and composite materials. It has comparative advantages in application technology, operation safety, and recycling. Aluminum alloy has a wide range of applications.
According to the domestic goal of vehicle lightweight, the amount of aluminum used for each vehicle is expected to increase by 150kg by 2030, and the demand for aluminum is expected to increase by more than 6 million tons by 2030.
Cost Structure of Electrolytic Aluminum: Price of Alumina and Electricity Accounted for More Than 75%
The production cost of electrolytic aluminum mainly includes alumina, electricity, pre-baked anode, aluminum fluoride, cryolite, labor, cost, depreciation, and so on. The core cost boost comes mainly from energy and alumina, which together account for nearly 70% of production costs.
Since 2019, the alumina price first after magnified, Q2 due to environmental problems, such as red mud filtrate of dam leakage of alumina plant is part of Shanxi area operations, involving more than 6 million tons annual capacity or, environmental supervision on the influence of the bauxite and alumina on alumina prices may rebound, but along with the new capacity worldwide, back again.
The reproduction capacity will be about 10 million tons in 2019-2020, and about 4 million tons will be added in 2021. The new areas are mainly concentrated in Shanxi, Shandong, Guizhou, Guangxi, and Chongqing with relatively low production costs. The price of alumina may fluctuate at a low level, which is expected to maintain a low cost for electrolytic aluminum enterprises. In 2020, there will be a short-term substantial loss under the impact of the epidemic. However, with the recovery of domestic demand since Q2, the profit per ton even exceeds RMB 1,500 yuan/ton. At present, 100% of the operating capacity of the industry is in a profitable state. The low price of alumina and the regional transfer of low-cost power are expected to realize the sustainability of profits of electrolytic aluminum enterprises.
LEARN MORE:
Alumina and Electrolytic Aluminum
Aluminasol
https://www.globalmarketmonitor.com/reports/599250-aluminasol-market-report.html
Custom Reporting
https://www.globalmarketmonitor.com/request.php?type=9&rid=0
We provide more professional and intelligent market reports to complement your business decisions.
Chinese