Among base metals, aluminum stands out for its unique energy properties. In the current market environment, the supply rigidity of domestic electrolytic aluminum has gradually emerged, and the price of electrolytic aluminum has rebounded significantly.
In the aluminum industry chain, electrolytic aluminum smelting is the key bottleneck. At present, the mainland's electrolytic aluminum production capacity has almost reached the limit of the supply side, and the space for new capacity in the future is limited, the supply has become inelastic, while the demand remains resilient, which has led to the continuous increase in profits in the smelting sector.
With the continuous development of the steady growth policy and the strong demand of the downstream terminal industry, it is expected to promote the further rise of aluminum prices. In addition, in the context of the global dual carbon goal, the "carbon neutrality" policy will provide long-term support for aluminum prices, making aluminum prices easy to rise and difficult to fall.
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Overview of the electrolytic aluminum industry
Aluminum is second only to steel in production and consumption worldwide, and has become the second largest metal on which humans depend.
Aluminum is a silvery-white light metal that does not exist in nature in elemental form, but in the form of chemical compounds. Aluminum has the characteristics of light weight, low price, excellent thermal conductivity, easy processing and strong corrosion resistance, and is widely used in aviation, transportation, electronic power and construction.
The production process of electrolytic aluminum is to use alumina as raw material, and reduce alumina dissolved in molten cryolite into metallic aluminum through electrolysis. In terms of profits, the current domestic alumina and prebaked anode markets are oversupplied, and the bargaining power of aluminum mills has been improved, so profits have gradually shifted to the smelting link.
In the production process, every 1 ton of electrolytic aluminum produced needs to consume at least 4 tons of standard coal. However, aluminum's excellent physical properties, such as low density, high strength, corrosion resistance, etc., make it effective in reducing energy consumption in subsequent applications. From the perspective of the whole life cycle, aluminum is not a high-energy-consuming metal in the traditional sense.
Electricity and alumina are equally important in the production of electrolytic aluminum, accounting for more than 30% of the total cost per ton of electrolytic aluminum.
Among the production costs of electrolytic aluminum, the cost of electricity occupies the first place, and the price of electricity has a decisive impact on the competitiveness of aluminum plants.
The electricity used in the production of electrolytic aluminum in mainland China mainly comes from two categories: thermal power and hydropower.
In order to reduce costs and improve efficiency, the production of electrolytic aluminum in areas with low thermal power or hydropower costs has become an inevitable choice. Since 2017, the mainland's electrolytic aluminum production capacity has shifted from coal-dominated areas to hydropower-dominated Yunnan and other places, but the stability of hydropower supply has led to power rationing and production restrictions for electrolytic aluminum enterprises, further exacerbating the tight supply situation.
On the supply side, the domestic electrolytic aluminum production capacity is close to the upper limit set by the policy. The growth rate of domestic electrolytic aluminum production capacity began to slow down gradually. As of October 2023, the domestic electrolytic aluminum production capacity has reached 42.073 million tons, and this figure is gradually approaching the upper limit of 45 million tons.
As a standard bulk commodity, electrolytic aluminum has almost no difference in quality and price among companies, so the competition between companies mainly revolves around cost.
At the same time, the cost of foreign aluminum mills has risen under the policy pressure of high carbon taxes, and the resumption of production is still slow even in the case of falling energy prices. As a result, the overall supply of global electrolytic aluminum is growing slowly.
Aluminum industry chain combing
From the perspective of the industrial chain, the aluminum industry chain includes six core links from bauxite mining to the manufacturing of end products, mainly including: bauxite mining--- refining of alumina--- smelting of aluminum--- production of aluminum alloys--- processing of aluminum---- and finally the manufacture of end products.
The production raw materials and production processes of the aluminum industry chain are relatively simple, bauxite is the main raw material for the production of alumina, and alumina is the only raw material for the production of electrolytic aluminum. More than 90% of the world's alumina is produced using the Bayer process (i.e. alkali process), while all primary aluminium is produced using a molten salt electrolysis process.
From the perspective of geographical distribution, the global electrolytic aluminum production capacity is relatively concentrated. As the world's largest supplier of electrolytic aluminum, Continental occupies a leading position in the world in terms of production capacity and output. According to the United States Geological Survey (USGS), the global electrolytic aluminum production capacity will reach 77 million tons in 2022, of which China's production capacity will be 44 million tons, accounting for 57.1%.
Diagram of electrolytic aluminum industry chain:
Electrolytic aluminum market competition pattern and leading carding
From the perspective of market competition pattern, the concentration of electrolytic aluminum industry is relatively high. According to Mysteel's statistics, the world's top 15 electrolytic aluminum producers accounted for 65% of the world's total production in 2022.
There are seven companies on the list, namely Aluminum Corporation of China (including Yunnan Aluminum), Hongqiao, Xinfa, State Power Investment, Oriental Hope, Jiugang and Shenhuo, which together account for 37% of the world's total production. In addition, domestic electrolytic aluminum layout manufacturers also include Zhongfu Industry, Jiaozuo Wanfang, Tianshan Aluminum and Nanshan Aluminum.
Concentration of electrolytic aluminum enterprises:
数据来源:mysteel,安泰科,SMM
The production capacity of electrolytic aluminum in mainland China is mainly distributed in the northwest and southwest regions, showing relatively concentrated regional characteristics.
According to the data at the end of September 2023, the northwest region accounted for more than 30% of the country's electrolytic aluminum production capacity, and the southwest region accounted for 20%. In addition, North China and East China each have about 17% of their production capacity.
After the merger and acquisition of Yunnan Aluminum, Chinalco has become the largest electrolytic aluminum enterprise in mainland China, ranking first in the country in terms of production capacity, with a controlled production capacity of 8 million tons, accounting for 18.0% of the country.
Yunnan Aluminum Co., Ltd. ranks first in Yunnan Province in terms of electrolytic aluminum production capacity, and all the company's electrolytic aluminum production capacity is located in Yunnan Province, and the production cost of electrolytic aluminum in this province is at a low level in China. Yunnan Aluminum Co., Ltd. is the first enterprise in China to pass the ASI audit of the whole industry chain of bauxite, alumina, electrolytic aluminum and aluminum processing, and has a total production capacity of 3.1 million tons of electrolytic aluminum, of which 3.05 million tons of compliance capacity, accounting for 54.4% of the total completed production capacity of Yunnan Province, and 2.54 million tons of equity production capacity. Yunlu is also the largest supplier of green aluminum in China, accounting for 88.6% of its green electricity.
Shenhuo Co., Ltd. has abundant anthracite reserves, and the coal quality is high, in terms of aluminum business, the company has formed a layout in Xinjiang and Yunnan. Shenhuo Co., Ltd. has made full use of the energy advantages of Xinjiang and established a complete "coal-electricity-aluminum" industrial chain there. In terms of alumina, it benefits from the low bauxite price in the main alumina producing area of Baise in Guangxi, and has more cost advantages.
Power Investment Energy (the actual controller,) has its own power plant for power supply, and its electrolytic aluminum production is characterized by low cost and high profitability.
Tianshan Aluminum's electrolytic aluminum production base is located in the national Shihezi Economic and Technological Development Zone, and currently has an electrolytic aluminum production capacity of 1.2 million tons. #铝 ##有色金属##电解铝##财经##有色金属#
epilogue
From the perspective of consumption structure, construction, transportation and electricity occupy the top three of the total consumption of electrolytic aluminum. At present, the downstream demand structure is changing from the traditional industry to the high-end market, and the strong downstream demand is driving the growth of aluminum demand, and electrolytic aluminum enterprises with large compliant production capacity will occupy a more favorable market position. The electrolytic aluminum industry may face a long-term mismatch between supply and demand, which will make the profits of electrolytic aluminum enterprises continue to increase. In the long run, green development will also become a key driving force for the long-term demand for electrolytic aluminum in the future.
Pay attention to [Leqing Industry Observation] and gain insight into the industrial pattern!