Electrolytic Aluminum Industry Analysis: The Electrolytic Aluminum Industry Has Huge Potential Under Dual Carbon
1. Electrolytic aluminum: Domestic production capacity continues to expand westward, and the tight balance between supply and demand supports aluminum prices.
1.1 Aluminum processing and aluminum consumption capacity ranks first in the world, with domestic pricing power
As an important non-ferrous metal, aluminum is widely used in real estate, automobiles, industry and other manufacturing fields, and its price is highly cyclical. The upstream resource in the industrial chain is bauxite. Bauxite is divided into monohydrate bauxite, gibbsite and mixed bauxite according to the ore type. In 1889, Austrian scientist Bayer invented a method to extract alumina from bauxite. This is the Bayer method. Later, the electrolytic production method was invented, officially starting the history of aluminum industrialization.
The electrolytic aluminum industry chain mainly consists of upstream mining, midstream smelting, downstream processing and terminal consumption.
Upstream: Upstream is the mining and transportation of bauxite.
Midstream: The midstream is the preparation of electrolytic aluminum. The middle reaches of the electrolytic aluminum industry chain is a smelting link with high energy consumption and high emissions. Smelting 1 ton of electrolytic aluminum requires 13,500 kWh of direct current, accounting for more than 70% of the energy consumption of the entire aluminum industry. High energy consumption is accompanied by high carbon emissions. The carbon emissions from electrolytic aluminum smelting account for approximately the country's total carbon emissions. Accounting for 5% of the total, second only to the steel and cement industries
Downstream: The downstream demand for electrolytic aluminum mainly comes from the real estate and construction industry, transportation, power electronics and durable consumer goods, with consumer demand accounting for 39%, 17%, 16% and 14% respectively. The real estate and construction industries are important areas of aluminum consumption, and construction profiles account for more than one-third of total aluminum consumption.
my country's bauxite depends on imports, and there is a global bauxite surplus. The world's discovered bauxite reserves are 28 billion tons, and bauxite is mainly distributed in Guinea, Australia, Brazil and other countries. Among them, Guinea (proven bauxite reserves of 7.4 billion tons), Australia (proven bauxite reserves of 6.5 billion tons) and Brazil (proven bauxite reserves of 2.6 billion tons) account for about the world's total proven bauxite reserves. China’s bauxite reserves account for about 3% of the world’s total. From a regional perspective, most of my country's bauxite resources are distributed in the western region.
China is the world's largest aluminum processing country, accounting for 54.5% of global alumina production. IAI data shows that global alumina production in 2020 was 134 million tons, and China's alumina production was 73 million tons, accounting for 54.5% of global production. However, in addition to producing a large amount of alumina every year, my country also needs to import about 3 million tons of alumina to meet its own large electrolytic aluminum production needs. At present, my country's alumina processing capacity is mainly distributed in Shanxi and Shandong.
my country's total output of electrolytic aluminum ranks first in the world, and the market concentration is low. In 2020, domestic electrolytic aluminum production accounted for 57.1% of the global share, ranking first in the world; among them, the output of China Hongqiao and Chalco ranked first and second in the world. my country's electrolytic aluminum market is similar to the global market, but is less concentrated. Except for China Hongqiao and Chalco, which share more than 10% of the market share, other companies have lower market shares and the overall competition is fierce.
1.2 Review of production capacity transfer: Policy and cost factors drive production capacity to move westward
Electricity costs account for 30% of the production costs of electrolytic aluminum and are the most flexible, affecting the production costs of electrolytic aluminum companies. The electrolytic aluminum manufacturing industry is an energy-intensive industry, and the industry is largely driven by cost factors. From the cost structure of electrolytic aluminum, electricity accounts for 31% and alumina accounts for 42%. Electricity costs also account for a large proportion of alumina costs, so electricity costs are the most important cost in electrolytic aluminum production. factor.
Due to changes in electricity costs, my country's electrolytic aluminum production capacity has currently experienced two large-scale transfers:
The first stage (before 2010): Production capacity is mainly concentrated in Shanxi and Henan provinces. Reason: Bauxite resources are abundant and electricity costs are low. Henan and Shanxi are rich in bauxite resources and together account for more than 50% of China's bauxite reserves. At the same time, Shanxi is a major coal-producing province, and the cost of coal power generation is relatively low. Therefore, the aluminum industry in the two provinces developed rapidly in the early days. The total output of electrolytic aluminum in the country continues to grow, with an average growth rate of approximately 32%. From 2005 to 2010, Henan was the largest electrolytic aluminum production province in the country.
The second stage (2010-2017): Production capacity is transferred to Shandong, Xinjiang and other provinces. Reason: The cost of electricity has increased, and the cost advantages of self-owned power plants in Shandong and Xinjiang have become more prominent. With the rapid expansion of electrolytic aluminum production capacity in the region, pressure on coal environmental protection has increased. The state has canceled the preferential electricity price policy for electrolytic aluminum in Henan, and the cost of electricity for electrolytic aluminum has increased significantly. Shandong has rapidly emerged thanks to its own electricity production and low transportation costs of imported bauxite. Xinjiang also relied on its significant power advantages in coal resources to surpass Henan in 2014 and become the first and second largest electrolytic aluminum producing provinces respectively.
The third stage (2017 to present): Production capacity is transferred to western regions such as Yunnan and Inner Mongolia. Reason: The pressure on environmental protection has intensified. In response to the "double carbon" requirement, the proportion of fire-aluminum has gradually decreased. Regional environmental protection pressure has increased, and new production capacity in coastal areas has only decreased but not increased. Hydropower aluminum power generation is basically used in eastern my country and Inner Mongolia, and its carbon emissions are 7-8 times that of hydropower aluminum power generation. It is an inevitable trend to increase the proportion of Haide Aluminum Industry at the national strategic level. The "double carbon" goal proposed in 2020 basically declares the end of thermal power aluminum production capacity expansion. After 21 years, new production capacity may mainly come from provinces rich in hydropower resources such as Yunnan.
Summary: The two production capacity transfers in my country's electrolytic aluminum industry in the past 20 years were driven by electricity costs, and this orientation will still be difficult to change in the future. The western region of my country is rich in water resources. In the future, with the installation of wind and solar energy, the proportion of clean energy use in the western region will increase and the cost of electricity will decrease. Therefore, the westward shift of my country's electrolytic aluminum production capacity will become a major trend. In the short term, my country's electrolytic aluminum growth will be concentrated in Yunnan, a region with developed hydropower.
1.3 The average price of aluminum is expected to be 20,000 yuan/ton in 2022
According to our calculations, the domestic electrolytic aluminum shortage is expected to be 230,000 tons/110,000 tons/10,000 tons from 21 to 23, with supply and demand maintaining a tight balance. On the supply side, in the medium to long term, the ceiling of my country's electrolytic aluminum production capacity has emerged. In the short and medium term, due to the dual regulation of energy consumption, the release of new production capacity and the resumption of production capacity will be slow. In terms of demand, the downstream of traditional construction is expected to stabilize against the background of steady growth, while the growth rate of emerging demand such as photovoltaics and new energy vehicles is increasing, and the gap between supply and demand is expected to be maintained. In 2021, aluminum prices soared from 15,000 yuan/ton at the beginning of the year to 23,000 yuan/ton. The current price has dropped back to 19,000 yuan/ton in December. The price is expected to be around 20,000 yuan/ton in 2022, fluctuating up and down, with the range of fluctuation depending on new production capacity and production capacity recovery.
1.4 The supply of raw materials is loose, and electricity determines profits. It is expected that profit per ton will increase in 2022.
In the production process of electrolytic aluminum, alumina, electricity, and prebaked anodes are the most important cost components of electrolytic aluminum, accounting for approximately 30%, 40%, and 15% respectively. According to SMM data, the average production of 1 ton of electrolytic aluminum requires about 1.95 tons of alumina and 14,000 kilowatt-hours of electricity. The required auxiliary materials include 0.5 tons of prebaked anode, 50 kilograms of cryolite, and 25 kilograms of dry aluminum fluoride.
The supply of bauxite upstream of alumina is loose, and there is also a surplus of alumina. According to Fitch Solution's forecast, the commissioning of new projects in major bauxite producing countries such as Guinea, Indonesia and Australia, as well as the increase in production in India and Indonesia, will drive the growth of bauxite production. In terms of alumina, according to statistics from the General Administration of Imports, my country imported a total of 2.9 million tons of alumina in the first ten months and produced a total of 65.15 million tons domestically. The total annual supply is expected to be approximately 73.7 million tons, and the annual alumina consumption is approximately 72.39 million tons. tons, leaving 1.31 million tons.
It is expected that for every 0.1 yuan increase in electricity prices, the cost of electrolytic aluminum per ton will increase by 1,370 yuan, which will have a greater impact on thermal power aluminum. On September 21, the National Development and Reform Commission issued the "Notice on Improving the Ladder Electricity Price Policy for the Electrolytic Aluminum Industry", which clearly prohibits various localities from implementing preferential electricity prices for the electrolytic aluminum industry, organizing special electricity transactions, etc. If it has been implemented and organized, it should be canceled immediately. At the same time, in October, the National Development and Reform Commission issued the "Notice on Further Deepening the Market-Based Reform of On-grid Electricity Prices for Coal-fired Power Generation," which mentioned that the coal-fired power transaction price range in the thermal power generation market will in principle be expanded to a range that fluctuates up and down by no more than 20%. The market transaction price of electricity for energy-consuming enterprises is not subject to the 20% increase limit.
It is expected that prebaked anodes will remain at a high level of more than 5,000 yuan/ton in 2022. At present, the supply and demand pattern of prebaked anodes in my country is stable and price fluctuations have stabilized. Its price fluctuations are closely related to the price of electrolytic aluminum. The price of petroleum coke, the main raw material, is at a low level and the cost side is relatively stable.
The profit center of electrolytic aluminum is expected to be 2,000-3,000 yuan/ton in 2022. The profit range will fluctuate greatly in 2021, with prices rising from 1,000 yuan at the beginning of the year to a high of around 5,000 yuan. After the gross profit per ton of electrolytic aluminum fell in October, as alumina prices began to fall, profits gradually tilted towards electrolytic aluminum manufacturers again. According to estimates, the current average cost per ton of electrolytic aluminum companies is around 17,000 yuan, and the overall average profit range has returned to more than 2,000 yuan/ton. Excluding extreme circumstances, the profit range in 2022 is expected to be around 2,000-3,000 yuan/ton. (Report source: Future Think Tank)
2. Supply side: The production capacity ceiling has emerged, and the level of energy consumption control determines the ability to increase production in the short term.
my country's electrolytic aluminum supply end mainly consists of domestic electrolytic aluminum and imported electrolytic aluminum. It is predicted that total supply will increase by 1.62% year-on-year in 2022. According to estimates, my country's electrolytic aluminum production will reach 39.03 million tons in 2022, a year-on-year increase of 2.45% in 2021; the net import of electrolytic aluminum is 800,000 tons, which is expected to be 300,000 tons less than in 2021.
2.1 Domestic electrolytic aluminum: The production capacity ceiling is approaching, and production capacity release is limited under the background of power curtailment + dual carbon
my country's electrolytic aluminum production capacity is approaching the long-term upper limit of 45 million tons per year, and the current growth space is less than 2.5 million tons. After the aluminum industry experienced supply-side reform in 2017, the country determined a long-term space of 45 million tons/year to control the excessive growth of production capacity in the electrolytic aluminum industry. According to statistics from Baichuan Yingfu, as of the end of 2020, my country's electrolytic aluminum production capacity reached 43.56 million tons. The planned new electrolytic aluminum production capacity in 2021 will be approximately 2 million tons. If successfully completed, the country's total production capacity will reach 44.56 million tons per year, approaching the upper limit of 45 million tons. From a policy perspective, it is unlikely that production capacity supply will continue to relax in the future.
It is planned to add 2.16 million tons of new production capacity in 2021, but the current actual production capacity is only 620,000 tons. Production is hampered by power curtailments and energy consumption issues. According to Zhuolineng data, the total national electrolytic aluminum production capacity was 42.83 million tons on October 21. The planned new production capacity in 2021 is mainly distributed in Yunnan and Guangxi.
In the first half of the year, energy consumption in Yunnan and Guangxi did not meet the dual control standards, but it eased after production cuts in the second half of the year. In August, the National Development and Reform Commission released the "Barometer of Completion of Dual Targets for Energy Consumption in Various Regions in the First Half of 2021", in which Guangxi and Yunnan were both listed as red level one warnings, which means that energy usage in the region seriously exceeds standards.
Due to energy consumption and power restrictions, Yunnan's electrolytic aluminum production capacity will decrease by 1.83 million tons in 2021. Hydropower has the problem of unstable power supply during wet and dry periods, while electrolytic aluminum production has the characteristics of continuity. If a plant shuts down due to a power outage, the time and cost of restarting the equipment will be high. For example, in May 2021, due to the continued decline in thermal power coal reserves and the postponement of the hydropower flood season to June, the province's thermal power and hydropower generation seriously fell short of expectations. In June, China Southern Power Grid reduced the power load by more than 30% for the Yunnan electrolytic aluminum plant.
As of November, the national electrolytic aluminum operating production capacity has been reduced from 40 million tons to 37.6 million tons on the 21st, a decrease of 6%. A total of 3.75 million tons of production capacity has been cut across the country. Affected by increasing cost factors such as nationwide energy consumption control, power rationing, and tiered electricity prices, production capacity has been significantly reduced. It is observed that energy consumption factors will continue to disrupt the supply side in the second half of the year. The provinces with larger production capacity reductions are Yunnan, Inner Mongolia, and Guangxi. In mid-2021, various provinces and regions have successively introduced relevant policies. Xinjiang clearly restricted the region's electrolytic aluminum production capacity in the second half of the year, and its production capacity dropped again by 1.2 million tons in the second half of the year. The production reductions of each province in 2021 are as follows, totaling 3.75 million tons.
Our country has shown a trend of declining production capacity, but output has not declined. As of October 21, the national production capacity was 37.871 million tons, a year-on-year decrease of 2.7%, and the output was 32.36 million tons, a year-on-year increase of 6.5%. Electrolytic aluminum production capacity has continued to decline since the middle of the year, and has continued to decrease by 1.78 million tons since the beginning of the year.
Production capacity in 2021 is 1.41 million tons less than expected, with most of it postponed to 2022, mainly concentrated in Inner Mongolia and Yunnan. Among the subsequent 1.41 million tons of delayed production capacity, the delayed production capacity in Inner Mongolia was mainly due to regional energy consumption issues, while the production capacity in Yunnan was due to power constraints. At present, the problem of energy consumption and power rationing is still difficult to fundamentally solve, and supply-side disturbance factors still exist.
According to my steel statistics, the production capacity is expected to be 1.7677 million tons in 2022. During the "14th Five-Year Plan" period, the trend of stricter energy consumption indicators in various provinces will not change, and some areas with better energy consumption control will relax. Judging from the pre-commissioning projects, they are basically projects that have not been put into production in 2021 due to energy consumption control. Mainly concentrated in Yunnan, Guangxi and Inner Mongolia. The production rate is relatively average, maintaining around 400,000 tons per quarter.
The resumption of work and production in 2022 is closely related to energy consumption indicators in various places, and Yunnan's power restrictions will have a greater impact. In the second half of 2021, 548,000 tons of new production were resumed, distributed in Henan (250,000 tons), Qinghai (110,000 tons), Shanxi (68,000 tons), and Guizhou (120,000 tons). Yunnan and Guangxi have no suspended production capacity. Open. After experiencing significant production cuts this year, it is expected that energy consumption indicators in Yunnan and Guangxi will be relatively relaxed in the first half of next year, and the pressure of power curtailment will be reduced. The possibility and proportion of overcapacity reduction of 2.385 million tons this year are relatively high.
The production capacity is expected to be 2.07 million tons in 2022. During the "14th Five-Year Plan" period, the trend of stricter energy consumption indicators in various provinces will not change, and some areas with better energy consumption control will be relaxed. Judging from the pre-commissioning projects, they are basically projects that have not been put into production in 2021 due to energy consumption control. Mainly concentrated in Yunnan, Guangxi and Inner Mongolia. The production rate in the fourth quarter was relatively average, maintaining around 400,000 tons per quarter. In terms of production resumption, it is expected that Yunnan and Guangxi can restore 50% of their reduced production capacity this year.
It is expected that my country's electrolytic aluminum output will reach 39.03 million tons in 2022. The neutral assumption is that Guangxi and Yunnan provinces can reduce production capacity by 2.385 million tons and increase production capacity by 1.7677 million tons, reaching 50%. Based on this year's average capacity utilization of 90% and an average operation of 6 months, electrolytic aluminum production will increase by 94% compared with 2021. Thousands of tons. Assuming that production conditions in other provinces remain unchanged, output will reach 39.03 million tons in 2022.
2.2 Overseas electrolytic aluminum: Global production increased by 2.15 million tons from January to August, with a supply gap of 1.02 million tons
Data from the World Bureau of Metal Statistics (WBMS) shows that the global electrolytic aluminum supply shortage was 1.025 million tons from January to August. During the same period, the total global demand for electrolytic aluminum reached 46.2 million tons, and the supply side was 45.175 million tons, a year-on-year increase of 5%, of which China contributed 26.07 million tons.
It is predicted that my country's net imports of electrolytic aluminum are expected to reach more than 1.1 million tons in 2021. Wind data shows that my country’s net imports of electrolytic aluminum from January to September were 882,800 tons. It is estimated that my country's annual net import volume can reach 1.1 million tons. Among them, my country's electrolytic aluminum imports have increased significantly since 2020. From January to August 2021, the cumulative import of primary aluminum reached 1.0322 million tons, a cumulative year-on-year increase of 73.75%.
Reason: The domestic manufacturing industry has recovered rapidly, and the surge in aluminum demand has stimulated the rise in domestic aluminum prices. During the same period, the world was plagued by the epidemic and industrial demand was weak. In 2020, the difference between LME aluminum prices and domestic aluminum prices continued to widen. Data released by the General Administration of Customs of China show that China’s net imports of unwrought aluminum and aluminum materials in August 2021 were 322,500 tons, a year-on-year decrease of 36.09%. In August, my country's unforged non-alloy aluminum imports were 105,700 tons, a month-on-month decrease of 41.98% and a year-on-year decrease of 57.31%.
According to estimates, the world's major electrolytic aluminum manufacturers will increase their output by 12,800-1.68 million tons in 2021, and the supply growth rate will be approximately 1.8%-2.5%. In 2020, global electrolytic aluminum production was 65.29 million tons, an increase of 1.63 million tons year-on-year, with a growth rate of 2.57%. As global aluminum prices rise, aluminum companies begin to increase production and resume work. The annual increase in global electrolytic aluminum production in 2021 is expected to be 1.5-2 million tons.
2.3 Potential supply supplement: Recycled aluminum production capacity and output maintain high growth, with a small short-term base and a low proportion
In 2020, my country's secondary aluminum production capacity is 12 million tons, and the actual output is about 7.5 million tons. In 2021, the new production capacity will be 400,000 tons. my country's recycled aluminum industry started later than developed countries. my country's aluminum industry started with a weak foundation. The recycled aluminum industry began to emerge in the 1980s, but its development has been slow. Until around 2010, after the supply-side reform of the aluminum industry, primary aluminum production was restricted, small and medium-sized production capacity was cleared, domestic large-scale secondary aluminum production companies gradually emerged, and industry concentration increased.
The advantages of recycled aluminum are lower cost, lower carbon emissions and lower energy consumption than primary aluminum. From the perspective of raw materials, the sources of recycled aluminum raw materials are domestic scrap aluminum and overseas scrap aluminum. After 2018, my country introduced detailed controls on imported scrap steel from overseas, and the proportion of imported scrap aluminum in the recycled aluminum industry dropped significantly. In terms of technology, compared with primary aluminum, recycled aluminum only requires 5% of the energy equivalent to primary aluminum and emits only 5% of the greenhouse gases equivalent to primary aluminum. According to the "Recycled Nonferrous Metals Industry Development Promotion Plan", compared with primary aluminum production, each ton of recycled aluminum is equivalent to saving 3,443 kilograms of standard coal, saving 22 cubic meters of water, and reducing solid waste emissions by 20 tons.
It is expected that the output of recycled aluminum may reach 16 million tons in 2025, with a compound annual growth rate of 115%. Compared with developed countries, my country's recycled aluminum output is low. The output of recycled aluminum in the United States is more than three times that of electrolytic aluminum, accounting for 70% of aluminum consumption; recycled aluminum in Europe accounts for 60% of total aluminum consumption; during the same period, my country's recycled aluminum only accounted for about 18% of the year's output, and there is huge room for improvement.
Conclusion: The industry's capacity utilization rate is low, raw materials may be blocked, and it is currently difficult to generate incremental growth.
Capacity utilization is low. The average capacity utilization rate of my country's recycled aluminum industry is about 60%, and the operating rate is only 30-40%. The main reasons for overcapacity are serious homogeneous competition in low-end products and a single product structure, which will take a long time to change in the future.
Imports of raw materials are blocked. In 2018, my country made clear regulations on the import of scrap aluminum, which affected the amount of imported scrap aluminum. At the same time, domestic scrap aluminum has not yet reached the centralized scrapping period, recycling channels are unstable, and there is a certain uncertainty in raw material output.
3. Demand side: Traditional demand has stabilized at the margin, and new energy demand has become a bright spot.
Aluminum demand rebounded in 2021 and is expected to slow down in 2022, with demand growth falling to 1.3%. After the epidemic, as domestic and foreign manufacturing industries pick up, aluminum demand rebounds. In 2020, my country's electrolytic aluminum production was 37.08 million tons, imports were 1.06 million tons, consumption was 38.35 million tons, and there was a shortage of 200,000 tons. It is expected that my country's demand will increase to 39.43 million tons in 2021, the industry's supply and demand will maintain a tight balance, and the gap between supply and demand has narrowed. .
In my country's aluminum consumption structure, construction is the largest consumption area, accounting for 34%. The second largest demand comes from the transportation and power industries, accounting for 11% and 15% respectively. The construction industry accounts for only 25% of global aluminum consumption, while transportation and power use account for 23% and 21% respectively. my country's total aluminum consumption is still in the process of long-term growth. Demand in my country's aluminum consumption industry has more than doubled in the past decade, with a compound annual growth rate of 9.2% from 2010 to 2020. Total consumption has grown steadily, with no significant decline in growth rate in any year.
Construction and manufacturing will rebound in 2021, and construction demand in 2022 is expected to be the same as this year. The completion volume of the construction industry, which is the main downstream demand, has rebounded. At the same time, the prosperity of the manufacturing industry, led by automobiles, continues to rise.
3.1 Traditional demand: Construction demand will improve slightly in 2022; automotive aluminum will rise steadily
architecture. The rebound in real estate completion data in the first half of 2021 will drive a rebound in demand for aluminum in construction. Construction demand is expected to be flat year-on-year in 2022.
In the field of construction, electrolytic aluminum is mainly used for aluminum doors and windows, building curtain walls and decorations installed after the building is completed, which is highly related to the completion of real estate.
Sinolink Real Estate Group determines that sales in the real estate industry will still face pressure in the future. In November 2021, the year-on-year growth rates of real estate development investment completion, newly started construction area, and construction area were -4.3%, -21.0%, and -24.7% respectively. The decline was slightly narrower than the decline in December 2019. However, the downward trend continued in October. At present, real estate companies are generally still pessimistic about future sales prospects, and overlay financing has not improved significantly. Investment and new construction in the real estate sector are both under pressure.
Construction-oriented demand is expected to be the same in 2022 as in 2021. The demand for construction aluminum in 2021 will be 13.45 million tons, with a growth rate of approximately 2%. Demand in 2022 is expected to be 13.58 million tons, the same as demand in 21 and a slight increase.
car. Automotive aluminum is expected to grow steadily in 2022. Data from the China Automobile Association shows that in November, our country's automobile production and sales reached 2.585 billion and 2.522 million vehicles respectively, with monthly growth of 10.9% and 10.9% and one-month growth of 8.1%. In November, the production and sales of new energy vehicles were 459,000 and 450,000 respectively, an increase of 15.1% and 17.3% respectively from the previous month and a year-on-year increase of 1.5 times. Compared with this year, the new energy vehicle segment is expected to maintain a high growth rate, and the production and sales of traditional vehicles are expected to increase slightly in 2022.
The trend toward lighter cars is a long-term increase in aluminum consumption. According to the latest report from the European Aluminum Association, the amount of aluminum used in European passenger cars was 180 kilograms in 2019, and it is expected that the average amount of aluminum used in bicycles will increase to 200 kilograms by 2025. Automotive structures and electric vehicle battery boxes will be the main drivers of passenger car aluminum growth. In developed countries in Europe and the United States, the amount of aluminum used in transportation accounts for approximately 50% of aluminum consumption, which is the main application area for aluminum consumption. However, in China, it only accounts for 30%. This is a huge improvement as the amount of aluminum used in home bikes is only 120-140kg. space. As lightweight requirements increase in smart driving and new energy vehicles, the amount of aluminum used in body structures and battery trays will increase significantly. (Report source: Future Think Tank)
According to the "Energy Saving Roadmap and New Energy Vehicles" released by the China Association of Automotive Engineers, the amount of aluminum used in new energy bicycles in 2020 was 190 kilograms, and the amount of aluminum used in bicycles will reach 250 kilograms in 2025. The production and sales of new energy vehicles are booming, increasing demand for automotive aluminum. The explosive growth of new energy vehicles will continue to drive demand for electrolytic aluminum. The China Automobile Manufacturers Association predicts that China's new energy vehicle CAGR will be no less than 40% in the next five years. We estimate that our country's new energy vehicle production in 2021-2023 will be 2.7 million, 3.78 million and 5.29 million vehicles respectively. It is conservatively estimated that the aluminum consumption of new energy vehicles in 2023 will be 1.16 million tons, with a compound annual growth rate of 138%. From January to November 2021, the number of new energy vehicles exceeded 2.5 million, and it is expected to exceed 2.7 million in 2021. Growth rates for 22 and 23 are conservatively estimated at 30%.
3.2 Emerging demand: Photovoltaic demand growth in 21-23 is 36/39/450,000 tons, CAGR = 19%
Photovoltaic aluminum is mainly used in the frames of photovoltaic modules and photovoltaic brackets. Photovoltaic frames are used to secure and seal solar modules, enhance module strength, extend service life and facilitate transportation and installation. In addition to photovoltaic modules, the installation process of photovoltaic power generation systems or application products also requires photovoltaic brackets, and aluminum alloy profiles are one of the main materials used to manufacture photovoltaic brackets. For new photovoltaic power plants, approximately 6,500 tons of aluminum profiles are required per GW. Conservative expectations are that the capacity of photovoltaic installations will consume 2.84 million tons of aluminum in 2023, with a compound annual growth rate of 19%. In 2020, my country's cumulative photovoltaic installation capacity was 252.2GW. According to the China Photovoltaic Association's forecast, my country's conservative estimate is that new photovoltaic installation capacity will exceed 90GW in 2025, which is used to predict the increase in aluminum demand. It is estimated that the increase in aluminum demand driven by new photovoltaic power plants in 21-23 is 360,000 tons/390,000 tons/450,000 tons respectively.
4. investment analysis
The electrolytic aluminum industry is an energy-intensive industry and relatively sensitive. Therefore, scale and the entire industry chain can help reduce overall costs. In addition to the cost of electricity, the cost of thermal aluminum is also greatly affected by coal prices, and the current uncertainty in the industry has also increased. Hydroelectric aluminum on a "carbon neutral" background. The benefits will be greater and the cost advantage will be stronger.
Yunnan Aluminum Co., Ltd. : China’s largest hydroelectric aluminum company expects to benefit from carbon neutrality in the long term. The company has established a relatively complete aluminum industry chain, integrating bauxite mining, alumina production, electrolytic aluminum smelting, aluminum processing and aluminum carbon product production. The new production capacity will be implemented in 2021. The total production capacity of Yunnan Aluminum Haixin, Yunnan Aluminum Yixin and Wenshan Aluminum (including completed but not put into production) is approximately 1.65 million tons/year, which is the main production capacity increase in recent years. The second phase of Yunnan Aluminum Haixin's 300,000 tons/year production capacity is in the stage of being completed and put into production.
Shenhuo Co., Ltd. :Henan’s head in the field of electrolytic aluminum, deploying hydroelectric aluminum. The company's electrolytic aluminum production capacity is 900,000 tons/year, coal 15 million tons/year, power generation capacity 870MW, casting 100,000 tons and 25,000 tons aluminum foil, forming a relatively complete thermoelectric aluminum industrial chain. Currently, the company is actively deploying Yunnan Shenhuo and Xinjiang Shenhuo. After reaching the hydropower aluminum production capacity, the production capacity can account for 50%. Yunnan's production capacity will still be released at 150,000 tons in 2022.
Chalco: A leader in the aluminum industry, with a complete industrial chain layout and excellent cost advantages. The company is a major player in China's non-owned metals industry. Its comprehensive strength ranks among the top priorities in the global aluminum industry. The company's alumina production capacity ranks first in the world, and its primary aluminum production capacity ranks second in the world. It is also the only large-scale production and operation company of Chinalco, which integrates the exploration and mining of bauxite, coal and other resources, production, sales, technology research and development, aluminum, primary aluminum and aluminum alloys, international trade, logistics industry, thermal power generation and new energy power generation. .
Nanshan Aluminum: It has the entire aluminum industry chain, and its processed products are gradually becoming high-end. The company has laid out the entire industrial chain. Its current alumina production capacity is 2.4 million tons, electrolytic aluminum production capacity is 810,000 tons, aluminum profile is 320,000 tons, cold coil is 700,000 tons, hot coil is 800,000 tons, and tolerance is 14,000 tons tons, 91,000 tons of aluminum foil. Benefiting from the trend of lightweight vehicles and new energy sources, the company is expected to see increased demand for aluminum automotive sheets and aluminum battery foils.
Mingtai Aluminum: Covering all categories of aluminum processing, it has entered a period of rapid production. The company has a variety of products including aluminum materials, aluminum mints, aluminum sheets and aluminum foils. The company is establishing a Gwangyang aluminum project in South Korea, adding 120,000 tons of production capacity, and will start trial production in the second half of 2021; it is also establishing a 500,000-ton Minglang new material project, adding 200,000-300,000 tons of production capacity, the first phase will be launched in May 2021. It became operational in March; it has a 700,000-tonne recycled aluminum and high-performance aluminum project under construction, with production and sales expected to exceed 2 million tons in 2025.
