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德邦证券:云南进入常规枯水期 或带动国内电解铝价格提升

Debon Securities: Yunnan enters a period of regular dry water or may drive domestic electrolytic aluminum prices to rise

Zhitong Finance ·  11/01/2023 14:36

It is estimated that a total of 1.15 million tons of electrolytic aluminum will be discontinued in Yunnan, accounting for 20.3% of the current total electrolytic aluminum production capacity in Yunnan.

The Zhitong Finance app learned that Debon Securities released a research report saying that according to SMM information, the proportion of electrolytic aluminum production reduction in Yunnan is basically determined, and the four electrolytic aluminum companies in the province have cut production by varying degrees (9%-40%). The current production cuts are relatively rapid from news confirmation to enterprise execution. It is expected that some companies will begin to stop production in the near future. According to estimates of the extent of production cuts received from companies, the total production reduction scale is expected to be 1.15 million tons. The bank believes that the cessation of aluminum electrolytic production in Yunnan may bring uncertainty on the supply side of the industry, that aluminum prices may rise, and that companies related to electrolytic aluminum are expected to benefit.

Recommended:China Hongqiao (01378), Yunlu Co., Ltd. (000807.SZ), Tianshan Aluminum (002532.SZ). Beneficial targets: Shenhuo Co., Ltd. (000933.SZ) and China Aluminum (601600.SH).

Incidents:According to SMM information, the proportion of electrolytic aluminum production reduction in Yunnan is basically determined. The four electrolytic aluminum companies in the province have cut production by varying degrees (9%-40%). The current production cuts are relatively rapid from news confirmation to enterprise execution. It is expected that some enterprises will begin to stop production in the near future. According to estimates of the extent of production cuts received from enterprises, the total production reduction is estimated to be 1.15 million tons.

The main views of Debon Securities are as follows:

Yunnan has entered a period of regular dry water, and demand for power delivery increased in the fourth quarter.

Looking at the monthly precipitation in Yunnan, the fourth quarter is a regular dry water period, and the incoming water situation in the Yunnan region is expected to decline markedly. From 2000 to 2022, the average precipitation for the 1st to 4th quarters in the Kunming region of Yunnan Province was 18.61, 99.83, 176.72, and 38.07 mm, respectively. Among them, the average precipitation in the fourth quarter was low. Precipitation is expected to affect the overall level of hydropower generation in Yunnan. Furthermore, judging from the current volume of electricity transmission in Yunnan, the current demand for electricity transmission in Yunnan is expected to be higher than last year. In January-September, the electricity transmission volume outside Yunnan Province was 14.827 billion kilowatts, down 2.1% from the previous year and 7.2 percentage points narrower than in January-August. The level of outbound electricity transmission in Yunnan Province increased in September, but at present, its outbound electricity transmission volume is still lower than last year's level. Currently, there is still a gap of 40.861 billion degrees from last year's total power transmission volume of 181,688 billion kilowatts.

It is estimated that a total of 1.15 million tons of electrolytic aluminum will be discontinued in Yunnan, accounting for 20.3% of the current total electrolytic aluminum production capacity in Yunnan.

In terms of production discontinuation data, according to SMM, the current production reduction ratio of electrolytic aluminum in Yunnan is basically determined. The four electrolytic aluminum companies in the province have cut production by 9%-40%. It is expected that some enterprises will begin to shut down production in the near future, with a total production reduction of 1.15 million tons. Judging from the total electrolytic aluminum production capacity in the Yunnan region, as of August 2023, the total production capacity of electrolytic aluminum in Yunnan is 5.66 million tons. Based on the discontinuation of production of 1.15 million tons, the current discontinuation of production capacity is expected to account for 20.3% of the total production capacity. Based on the discontinuation of production in two months, the expected reduction in production is 191,700 tons.

Supply-side disturbances may drive domestic electrolytic aluminum prices to rise.

Review the performance of aluminum prices in Yunnan when the operating rate of electrolytic aluminum fluctuated greatly in recent years. First, from April 2021 to November 2021, the operating rate of electrolytic aluminum in Yunnan Province fell from 97.98% to 58.15%, and the average monthly price of electrolytic aluminum increased from 17,961.90 yuan/ton to 19,089.09 yuan/ton, an increase of 6.3%; second, from August 2022 to December 2022, the operating rate of electrolytic aluminum in Yunnan Province fell from 99.81% to 80.26%, and the average monthly price of electrolytic aluminum increased from 18,533.91 yuan/ton to 18,995.45 yuan/ton, an increase of 2.5%. It is expected that the current cessation of electrolytic aluminum production in Yunnan will have a certain impact on domestic electrolytic aluminum supply and bring some momentum to aluminum prices.

Risk warning:Downstream demand growth fell short of expectations, global electrolytic aluminum projects were put into production too fast, and Yunnan's electricity consumption policy changed drastically.

Disclaimer: This content is for informational and educational purposes only and does not constitute a recommendation or endorsement of any specific investment or investment strategy. Read more
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