Aluminum prices depressed industry deep losses inventory reduction price dilemma
Date of release:2019-03-15 : Click:
The reporter of securities times ·e company recently interviewed and investigated upstream and downstream enterprises in the aluminum industry. He learned that although aluminum enterprises have reduced production capacity in the past year and the market inventory has declined to some extent, the current demand still cannot significantly boost the market price and the supply exceeds the demand. In 2019, aluminum prices or weak market operation, or in the short term it is difficult to have a sharp high performance.
The price of aluminum is approaching 13,000
"The spot aluminum price in the market these days is around 13600 yuan/ton, which is a little higher than the previous period." Referring to the price of domestic aluminum industry in the past more than a year, li hongwei, secretary of the board of directors of shenhuo shares, told reporters that in January 2019, the domestic aluminum spot price had dropped to 13,250 yuan per ton, reaching a low in recent years.
In 2017, due to supply-side reform and other factors, domestic aluminum prices have been rising all the way, reaching a record high of over 17,000 yuan/ton at one time. But the aluminum market has been in a slump since October 2017, when prices fell.
"In 2018, aluminum prices bottomed out, hovering around the low all year round, and fluctuating between 13,450 yuan and 15,000 yuan/ton. "In the first nine months, aluminum prices were basically running at a 'W' trend. In the fourth quarter, aluminum prices kept going down monotonously. Looking back on the trend of aluminum prices in the past year, ye jianjun, an analyst of aluminum products at business news, said that in mid-to-early January 2019, the average price of aluminum ingot market continued to be weak. On January 15, the average price of aluminum ingot market fell to 13,223.33 yuan/ton, which was the lowest in nearly two years.
As of March 11, the market average price of aluminum (99.70) was 13,630 yuan/ton, up by 2.53% from 13,350 yuan/ton on the first working day of the New Year (February 12), according to the business news agency. The daily price was up 3.08 percent from January 15.
Ye jianjun said that the recent steady rise in aluminum prices, on the one hand, based on the fourth quarter of 2018 aluminum prices fell substantially, high cost aluminum plant losses are serious, some domestic aluminum plants have cut production pressure, the industry self-capacity phenomenon is obvious. On the other hand, in terms of policy, the international trade relationship between China and the United States has been relaxed, the demand stimulated by domestic infrastructure has gradually recovered, the application of aluminum products has expanded, and the fundamentals of domestic aluminum ingots have gradually improved. In addition, due to the reduction of alumina price in the early stage, the cost side supports the expected collapse. After the price of aluminum plunges sharply, it basically touches bottom and runs. It is expected that the price of aluminum ingot is still in the state of repair in the near future.
"After the Spring Festival aluminum market spot price did go up a little, but starting in March, due to the early rise, the downstream will to take the goods light, large family is still hoarding state, the price has some support, but the forward or no rally trend. Zhuo chuang aluminum analyst zheng chunlei also said that after the domestic aluminum price trend stabilized, but late growth momentum is not too much. Although the price of aluminum to maintain growth, but aluminum enterprises still losses, after the holiday there is still aluminum production. The overall demand for aluminum in February and march is flat and has not yet reached the peak demand season. The recent upward factor of aluminum price is the downstream construction after the holiday, and the demand increases, but the overall demand increment is relatively limited, and the supply of aluminum market is still sufficient at present.
Not only aluminum prices hit low, as electrolytic aluminum upstream, domestic carbon prices have been falling for nearly a year. On March 12, the reporter goes to be located in henan gong yi a medium carbon plant that produce a plant to see, inside a few greenhouses, a few code put carbon block product. Although a month has passed since the Spring Festival holiday, there is still no sign of starting work in the factory.
"The winter production limit has not yet passed and many enterprises have stopped production since last November. Carbon prices have been low for nearly a year, and companies have scaled back production. Hu mingzhe (pseudonym), head of the carbon plant, told reporters that in 2017, the domestic carbon price had reached a high of 4,400 yuan per ton, but the current offer is less than 3,200 yuan per ton. In February, leading shandong weiqiao carbon price dropped 140 yuan/ton, march the company again down 140 yuan/ton, two consecutive decline.
"The price rise in 2017 was due to the fact that the first batch of carbon enterprises that failed to carry out the environmental impact assessment all stopped in the year. The cost of new environmental protection equipment added by enterprises increased and the market supply decreased. In addition, the illegal production capacity of electrolytic aluminum in China was exposed one after another, causing panic in the market and the downstream enterprises actively stockpiling goods. At that time, a lot of electrolytic aluminium enterprises want to take cash to buy goods in the factory. However, at the end of October 2018, due to the fact that the government decree on the production of peak fault did not meet the expectation and the environmental protection production limit was not uni-directional, there was no speculation in the market, and the price of the product dropped sharply thereafter. Hu mingzhe analysis.
Along with the aluminum price falls sharply, the aluminum industry also enters the overall loss.
"Since last year, the aluminum industry has started a long-term, industry-wide loss. The losses have been so long that they have exceeded normal conditions. Speaking of the current aluminum industry enterprises profit and loss situation, li hongwei told reporters that it is understood that the aluminum industry at present almost 97 percent of the enterprises are in the red. As a province with large electrolytic aluminum production capacity, the loss of electrolytic aluminum enterprises in henan can exceed 2000 yuan per ton of products.
Liu libin, executive vice President of henan nonferrous metals association, also pointed out in an interview that most domestic electrolytic aluminum enterprises are in deficit at present, and the market price should have been the bottom. If the price falls again, unless is the upstream raw material coal or the alumina price drops sharply. At present, however, alumina prices continue to be unlikely.
He said that at present, the cost of electrolytic aluminum in henan is 15,000 yuan per ton. At the current market price, almost none of the enterprises can make a profit.
Statistics from the ministry of industry and information technology show that in 2018, the average spot price of electrolytic aluminum in China was 14,262 yuan/ton, down 1.8% year on year. Influenced by the rectification of environmental protection, the price of bauxite continued to rise, the price of coal rose, and the cost of energy conservation and emission reduction of enterprises, the comprehensive production cost of electrolytic aluminum increased significantly year on year. In 2018, the aluminum industry posted a profit of 37.2 billion yuan, down 40 percent year-on-year. Among them, the profit of aluminum mining and dressing reached 700 million yuan, up 19.6% year on year. The profits of aluminum smelting and aluminum processing industries reached 11.2 billion yuan and 25.4 billion yuan respectively, down 54.6% and 31.4% year-on-year.
Shenwan hongyuan research report also said that in 2018, domestic macroeconomic growth slowdown coupled with the escalation of sino-us trade friction, aluminum prices fell from 15,260 yuan/ton at the beginning of the year to 13,605 yuan/ton at the end of the year, down 10.8% year-on-year. Falling prices have made corporate profits worse and forced some manufacturers to halt production because of continuing losses. It is estimated that by the end of January 2019, the industry still has more than 15% of its operating capacity and the cash cost is above 13,500 yuan/ton for aluminum, among which the loss of 500,000 tons of production capacity is more than three months.
The current aluminum companies' performance decline, from the listed companies in 2018 earnings forecast can also be seen.
On February 28, chang 'alin released its 2018 earnings report, showing that during the period, the company realized an operating income of 4.409 billion yuan, up 3.58% from the same period last year, and a net profit loss of 432 million yuan, down 352.99% from the same period last year. Previously, the company's 2018 earnings forecast released by yunal shares predicted a loss of 1.46 billion yuan during the period, compared with a net profit of 657 million yuan in 2017. And zhongfu industrial performance forecast also said that the company is expected to lose 1.8 billion yuan to 2.2 billion yuan in net profit in 2018, down 1.6 billion yuan to 2 billion yuan from the same period last year.
Some production capacity has been completely withdrawn
"At present, except for some enterprises in xinjiang, yunnan and other regions with low electricity costs, which can barely maintain break-even, it is difficult for other regions to sustain losses for a long time, and they have begun to shut down production capacity consciously." Hu mingzhe tells a reporter, the environmental protection pressure of enterprise of central area electrolytic aluminium is too big, and charge of electricity is higher, the production cost of a ton of aluminium is in 14200 yuan to 14500 yuan, and xinjiang area cost can compress 13800 yuan or so. Even so, the qinghai area that belongs to western part also comes out recently news, had two electrolytic aluminium business to carry out shut down.
"" in 2018, few new electrolytic aluminum production capacity will be added in henan, and many enterprises will cut production. According to liu, the current aluminum capacity in operation in henan is only over 2 million tons, compared with more than 3 million tons in recent high years. According to a rough calculation, between 2018 and now, the total production capacity in henan province is about 780,000 tons.
"The idled production capacity is almost always out, and the reason for the idled production is also because of sustained losses. These are not only small and medium-sized enterprises, but also some large enterprises. He said.
According to the statistics of shenwan hongyuan, the electrolytic aluminum industry in 2018 involves a total capacity reduction of 2.946 million tons, with the reduction mainly concentrated in high-cost areas. Most of the cuts in 2018 come after June. Except for a few enterprises like shanxi zhaofeng aluminum & power co., LTD and donglu aluminum co., LTD, which are affected by environmental protection factors to reduce production, most of them are due to the withdrawal or transfer of production capacity due to losses. The reduced production capacity is mainly concentrated in shandong (680,000 tons), henan (533,000 tons), gansu (580,000 tons) and other regions.
In 2018, under the depressed aluminum price environment, the production schedule of many resumed and new capacity projects has been delayed. According to the statistics of baichuan information, the total reproductivity of electrolytic aluminum in 2018 is 5.09 million tons. By December 28, 2018, the actual reproductivity of electrolytic aluminum has been 1.235 million tons, only 22% of which is lower than the market expectation. In terms of new production capacity, 4.05 million tons of domestic production capacity will be completed and put into production in 2018. 2.24 million tons will be put into production by December 28, 2018, and 1.81 million tons of production capacity will be put into production, accounting for 55% of the total construction scale.
In the process of gradual decline of production capacity, has the high inventory problem that has been restricting the rise of aluminum prices been alleviated?
"Domestic aluminium stocks were above 2.3m tonnes last year and are now down to about 1.5m to 1.6m tonnes. "" while inventories have come down, the overall impact on the market has not been significant." " 'apart from warehouse inventories, companies' aluminum inventories cannot be counted, so the current inventory data in the market can only serve as a reference indicator, and the significance of the indicator has declined,' Mr. Li said.
Liu libin also said, now the so-called inventory market even half a month of production is less than, take inventory to say things just inertia thinking. The inventory on futures market is not so convincing for actual market supply and demand. At present, many domestic enterprises no longer produce aluminum ingots, but sell in the form of aluminum liquid. In henan province alone, more than 70% of enterprises are producing and selling electrolytic aluminum liquid, and the inventory is calculated in the form of aluminum ingots. Therefore, the concept of inventory has been diluted compared with previous years, and its relative role has been declining.
Accelerated industrial transfer
In the whole industry continued depressed profit environment, aluminum enterprises accelerated the pace of industrial transfer.
On March 2, zhongfu industrial announced that its holding subsidiary henan zhongfu aluminum co., LTD. (hereinafter referred to as "zhongfu aluminum") has an annual electrolytic aluminum production capacity of 500,000 tons. In order to further optimize the power energy structure required for the company's electrolytic aluminum production, reduce the cost of electricity, reduce carbon emissions from thermal power generation, and realize green and clean production, the company plans to suspend production of all 250,000 tons of zhongfu aluminum electrolytic aluminum and transfer it to guangyuan economic development zone in sichuan province, which is rich in hydropower resources.
Prior to this, linzhou linfeng aluminum and power co., LTD., the holding subsidiary of zhongfu aluminum, transferred its 250,000 tons/year electrolytic aluminum production capacity in December 2018. After the transfer of partial electrolytic aluminum production capacity of zhongfu aluminum industry, namely 250,000 tons/year, the transfer scale of electrolytic aluminum production capacity of the company involved will reach 500,000 tons/year, while the head office of zhongfu aluminum industry, gongyi city, only retains the electrolytic aluminum production capacity of 250,000 tons.
Zhongfu industrial electrolytic aluminum capacity transfer is not a case.
"The 900,000 tons of electrolytic aluminum production capacity of shenhuo shares in henan has been transferred to yunnan province in October 2018. Several aluminum enterprises in henan, including zhongfu and yichuan, are following suit." According to li hongwei, yunnan and sichuan are rich in water resources and the electricity price is 0.25 yuan per kilowatt hour, while henan's current cost of thermal power is more than 0.4 yuan per kilowatt hour. Based on the calculation of 13700 kilowatt hours per ton of electrolytic aluminum, the cost of electricity alone after the capacity transfer can save enterprises about 2,000 yuan per ton.
He said that while the shenhuo project in yunnan had not yet started production, the government had agreed on electricity prices. In the later stage, shenhuo's electrolytic aluminum has obvious competitive advantages. Xinjiang's production capacity can enjoy low electricity price, while yunnan's production capacity logistics cost and electricity price are low. In the later stage, the overall scale of electrolytic aluminum in henan will be gradually reduced, and the local industry will focus on the development of high-end aluminum processing and the construction of aluminum processing bases in gongyi, luoyang and other places, while the traditional electrolytic aluminum production will be transferred to regions with cost advantages.
In response to the current rush of electrolytic aluminum capacity transfer, liu libin also said that the state has always advocated the use of market-oriented methods to reduce overcapacity, clean up invalid capacity, capacity replacement is a compliance operation.
"In the general direction, aluminum application demand is still small growth. But the country has now been prohibited from building new capacity, the only one is the replacement of capacity. In terms of enterprise benefits, the replacement of production capacity to the southwest region, abundant hydropower resources, electricity costs will be relatively reduced. He said that in addition to zhongfu's 500,000 tons capacity and shenhuo's 900,000 tons capacity, the electrolytic aluminum production capacity transferred out of henan in 2016 has reached more than 1 million tons, accounting for half of the existing capacity.
Also showed that the ministry of information from the of electrolytic aluminium enterprises through merger and reorganization and other ways to implement capacity replacement notice related matters of the printing, we have already had more than 400 ten thousand tons of electrolytic aluminium production capacity completed across the province replacement, among them, more than 300 ten thousand tons of production capacity, transferred to the energy-rich regions such as Inner Mongolia, yunnan, at the same time of keep strict controls of electrolytic aluminium production capacity high pressure situation, electrolytic aluminium industry structure optimized constantly.
At the ongoing two sessions of the National People's Congress, came out of the industrial enterprises electricity price reduction, tax rate reduction of good news, become the recent electrolytic aluminum industry generally concerned about the topic.
On March 5, the government work report pointed out that the reform to promote the reduction of charges for enterprises, to deepen the market-oriented reform of electricity, clean up the electricity price surcharge, reduce the cost of electricity in the manufacturing industry, the average electricity price of general industry and commerce by another 10%. Meanwhile, the value-added tax for manufacturing enterprises was raised from 16 percent to 13 percent.
"At present, cryolite-alumina salt-melting electrolytic electrolysis method is mainly used in the production of electrolytic aluminum. Generally speaking, the production of 1 ton of electrolytic aluminum requires 13500 KWH of electricity and 1.92 tons of alumina. Electricity and alumina are the two main costs of the production of electrolytic aluminum, respectively accounting for 30% to 40% of the total cost. If the cost of electricity down, for electrolytic aluminum enterprises is undoubtedly a big positive. Hu mingzhe said.
Tianfeng securities research report also believes that electrolytic aluminum electricity basically belongs to the category of large industrial electricity, electricity price is mainly composed of feed-in tariff and intermediate cost, including transmission and distribution price, government funds and so on. And the electricity price additional charge in the government work report mainly refers to the government-managed fund. At present, the government-managed fund is 0.05 yuan/degree. If the follow-up government funds are no longer charged and the average electricity consumption of electrolytic aluminum is estimated at 13500 KWH/ton, the cost of electrolytic aluminum may drop by 675 yuan/ton and the profit space of enterprises will be expanded. For the reduction of tax, the above report also said that at present, the sales tax of electrolytic aluminum enterprises value-added tax level at 16%, value-added tax reduction of 3%, for aluminum enterprises gross profit impact of 2.65% ~ 6.63%.
In this regard, li hongwei told reporters that the market-oriented reform of electric power and the adjustment of value-added tax rate of manufacturing enterprises will be good for the reduction of electric power cost and tax cost of enterprises. Enterprises have done a preliminary calculation, it is expected that the annual tax cost in 2019 can be significantly reduced.
However, liu libin believes that the cost of electricity is reduced, right