Everbright Securities released a research report saying that domestic bauxite's dependence on the outside world continues to increase, and the strategic attributes of bauxite are gradually showing. If

In 2025, new domestic alumina production capacity and the increase in imported bauxite from overseas can be gradually implemented, which may ease the tight domestic bauxite situation and the high price of alumina, and some of the profits from alumina will be transferred to electrolytic aluminum. It is recommended to focus on Yunlu (000807.SZ), Shenhuo (000933.SZ), and Zhongfu Industrial (600595.SH), which have a low self-sufficiency ratio for alumina in China; China Aluminum (02600, 601600.SH), China Hongqiao (01378), which have an integrated layout, Tianshan Aluminum (002532.SZ) and Nanshan Aluminum (600219.SH), etc., which have a low self-sufficiency rate of aluminum oxide in China and an aluminum layout.

The main views of Everbright Securities are as follows:

The supply bottleneck for high alumina prices in 2024 is bauxite resources.

Although the average price of alumina in China was 5515.76 yuan/ton in November 2024, the industry's operating rate did not exceed the February 2019 high, indicating that the bottleneck was more on the mining side. Local policies introduced in Shanxi and Henan had a certain impact on bauxite supply. From January to October 2024, China's bauxite production totaled 48.0228 million tons, a year-on-year decline of 14.39%; at the same time, due to the traditional rainy season in September-October affecting part of Guinea's shipments, in September and October 2024, Guinea's bauxite imports were 6.679 million tons and 7.593 million tons, respectively, down 39% and 30.7% from the high point in August 2024. Domestic exports of alumina changed to net exports for 8 consecutive months, indicating that overseas alumina is also facing shortages.

New supply of overseas bauxite and domestic alumina in 2025 is expected to ease domestic alumina prices.

According to commodity price estimates from January 3, 2025, the estimated cost of producing alumina in coastal regions using imported ore from Guinea is 3,683 yuan/ton, which is lower than the cost of using domestic bauxite to produce alumina in inland regions of Henan and Shanxi. Therefore, new alumina production capacity may be invested in coastal regions. According to sensitivity estimates of 11.8 million tons of alumina production capacity newly invested in China in 2025, respectively, to reach 10%, 30%, and 50% production, if domestic bauxite supply and demand balance is to be reached in 2025, the increase in domestic bauxite imports from 2025 to 2024 will need to reach 3.7 million tons, 9.76 million tons, and 15.83 million tons, respectively, lower than the additional global bauxite production capacity of 53 million tons in 2025 and later. Considering issues such as newly invested mines falling short of expectations, it is still It is necessary to track the implementation of subsequent production, and there may also be repetition in the process of falling alumina prices.

Taking history as a guide, the price of alumina is not necessarily in sync with the price of electrolytic aluminum.

Referring to thermal coal in 2021, the bank believes that the price of alumina is not necessarily in sync with the price of electrolytic aluminum. In the range from November 10, 2021 to March 7, 2022, the price of electrolytic aluminum rose from 0.0185 million yuan/ton to 0.0239 million/ton, an increase of 29.3%; the price of thermal coal fell from 1,470 yuan/ton to 1,050 yuan/ton, a decrease of 28.6%. In a similar period from November 8, 2024 to December 16, 2024, the price of electrolytic aluminum fell from 0.0217 million/ton to 0.0201 million/ton; the price of alumina in Henan rose from 5,370 yuan/ton to 5,750 yuan/ton.

The “new three” demand is expected to hedge against the decline in real estate and support the upward shift in the price of electrolytic aluminum. In the downstream demand structure of aluminum in 2024, transportation and construction real estate accounted for the highest share of 24.7% and 23.8%, respectively. From February to May 2024, the cumulative year-on-year decline in real estate completed area was more than 20%, but the average monthly aluminum price rose from 18,806 yuan/ton in February 2024 to 20,784 yuan/ton in May 2024, indicating that demand for the “new three types” of new energy vehicles, photovoltaics, and battery foil still strongly supports aluminum prices. According to the bank's estimates, the 2024-2026 domestic electrolytic aluminum supply and demand pattern showed a tight balance and a continuous positive trend. 2024-2026 was 0.49 million tons of surplus, 0.24 million tons, and a shortage of 0.35 million tons, respectively. The aluminum price center is expected to move upward.

Pay attention to the premium price of aluminum for water, electricity, and electricity after the inclusion of electrolytic aluminum in the carbon trading market.

On September 9, 2024, the Ministry of Ecology and Environment issued the “Work Plan for the National Carbon Emissions Trading Market Covering the Cement, Steel, and Electrolytic Aluminum Industries (Draft for Comments)”. The draft solicitation of comments is a signal for the inclusion of industries such as electrolytic aluminum in the carbon trading market. According to Anteco, the carbon dioxide emissions of a ton of electrolytic aluminum produced using thermal power are about 13 tons (11.2 tons in the electricity production process, 1.8 tons in the electrolysis process), while the carbon dioxide emission of a ton using hydropower is only 1.8 tons (only the electrolysis process emits carbon emissions); according to the calculation of the domestic carbon price of 93.07 yuan/ton on January 8, 2025, each ton of hydroelectric aluminum is expected to save 1042.4 yuan in carbon tax costs. As a result, aluminum companies that use a higher proportion of hydropower will bear lower carbon taxes or will have more carbon emissions trading targets.