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天风证券: 电解铝由过往的成本定价转为供需定价 相关企业维持较高的吨铝盈利

Tianfeng Securities: Electrolytic aluminum changed from cost pricing in the past to supply and demand pricing, and related companies maintained high profits on tons of aluminum

Zhitong Finance ·  11/13/2023 14:45

On the basis that supply is limited and demand benefits from continuous growth driven by new energy sources, electrolytic aluminum has changed from cost pricing in the past to supply and demand pricing, so electrolytic aluminum companies have been able to maintain a high profit per ton of aluminum.

The Zhitong Finance App learned that Tianfeng Securities released a research report saying that the domestic electrolytic aluminum supply ceiling is about 45 million tons. Currently, against the backdrop of a construction capacity of 44.74 million tons close to a peak plus a capacity utilization rate of 96%, subsequent production capacity and production increases are limited. On the basis that supply is limited and demand benefits from continuous growth driven by new energy sources, electrolytic aluminum has changed from cost pricing in the past to supply and demand pricing, so electrolytic aluminum companies have been able to maintain a high profit per ton of aluminum. In the context of the improving industry pattern, it is recommended to focus on Shenhuo Co., Ltd. (000933.SZ), China Hongqiao (01378), Zhongfu Industrial (600595.SH), Yunlu (000807.SZ), China Aluminum (601600.SH), and Tianshan Aluminum (002532.SZ).

Tianfeng Securities's views are as follows:

Supply: Domestic supply is about to peak, and overseas supply is limited in the short term.

1) Domestic: The supply ceiling for electrolytic aluminum is about 45 million tons. Currently, in a context where the construction capacity of 44.74 million tons is close to its peak and the capacity utilization rate has reached a record high of 96%, subsequent production capacity and production increases are limited. Referring to changes in domestic electrolytic aluminum production capacity over the past few years, it can be seen that Yunnan was prone to production cuts due to insufficient hydropower in the fourth quarter, and other regions may also be disturbed by power shortages or other accidents. Currently, domestic electrolytic aluminum is facing a vulnerable situation where supply increases are limited and volume reductions are likely to occur; 2) Overseas: Stock production capacity has been cut since '21 due to the energy crisis, but has not yet recovered. The bank believes that current relatively weak overseas demand may have damaged Europe and America's willingness to reduce production capacity and resume production. New overseas production capacity is mainly concentrated in Indonesia and other countries, and its production capacity may be limited by poor infrastructure conditions and power plant construction. In summary, the bank expects a limited increase in domestic and overseas electrolytic aluminum supply within the medium term. Demand: Traditional demand is resilient, and the share of new energy demand continues to rise.

1) Traditional demand areas: Electrolytic aluminum is mainly used in construction real estate/transportation/electricity/consumer/machinery fields, accounting for 26%/24%/13%/12%/12%, respectively. In the real estate sector, the completed area of domestic housing in January-September was +20%, which clearly boosted demand for aluminum; although the overall increase in traditional automobile production in the transportation sector was limited by the replacement of new energy vehicles, the amount of aluminum used in bicycles may continue to increase; the overall resilience of traditional demand was stronger than expected. 2) New energy sector: Demand for electrolytic aluminum is mainly driven by photovoltaics and new energy vehicles. Exceeding expected growth in photovoltaic installations during the year combined with a high level of prosperity in the production and sales of new energy vehicles provided a large increase in demand for aluminum. According to the bank's estimates, domestic demand for aluminum in the new energy sector had been driven by 4% in the year 23.

Furthermore, the bank believes that the current demand for electrolytic aluminum shows two different characteristics from the past: 1) The continuous increase in the supply of new energy sources has smoothed out the cyclical fluctuations in traditional demand to a certain extent. According to the bank's estimates, the current demand for aluminum in the photovoltaic+new energy vehicle sector already accounts for about 15% of domestic aluminum demand, and the driving effect on overall demand cannot be ignored. 2) Changes in demand characteristics have led to insufficient effectiveness of traditional terminal tracking indicators. Currently, consumer demand in segmented fields shows differentiated, diversified, and anti-seasonal characteristics. As the scope of downstream aluminum applications continues to expand, unit consumption in various fields has increased, so the current total terminal demand index cannot fully reflect the actual downstream demand situation for aluminum, and the growth in aluminum demand in traditional fields may easily be underestimated.

Profitability: Cost pricing has changed to supply and demand pricing, and limited room for cost growth guarantees the continuation of high profits

The price of aluminum has changed from being driven by costs in the past to being driven by supply and demand, and the bank believes that its raw material costs have no basis for a sharp rise to erode industry profits: 1) Alumina: Short-term spot tightness due to supply disturbances drives prices upward, but the medium-term overrun trend is obvious, and the price increase is limited. 2) Thermal coal: Tighter supply and seasonal recovery in demand since September have led to a rise in thermal coal prices. In the long run, it is expected that there is limited room for prices to rise after supply pressure eases. 3) Pre-baked anodes: The industry itself is excessive, and raw petroleum coke determines the price of anodes to fluctuate. There is no basis for a sharp rise in oil coke prices due to the continuous replenishment of imported petroleum coke and high port inventories. On the basis that the supply and demand pattern is improving, and the three core cost items (alumina, electricity, pre-baked anodes) do not have significant price increases, the bank believes that the current high level of profitability in the industry may be maintained.

Risk warning:Upstream raw materials fluctuate, new production capacity exceeds expectations, and downstream demand falls short of expectations

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