Domestic supply is strong and demand is weak Domestic aluminum prices have insufficient momentum to rebound

The upward trend in production capacity remains unchanged
.
As the profit level of electrolytic aluminum smelting continued to be at a high level in 2019, smelting capacity has continued to rise since the fourth quarter, and new investment and resumption of production capacity have contributed
.
The upward trend of supply in 2020 has not changed, and the new production capacity in the first quarter is mainly concentrated in the southwest region, including Yunlu Heqing Phase II, Yunnan Shenhuo Phase I, which began to be powered on and put into operation around New Year's Day, and the continued launch
of new production capacity of Guangyuan Zhongfu.
In addition to new production, the resumption of production capacity is also more active before the holiday, and the production capacity that Qinghai, Xinjiang, Inner Mongolia and other places were forced to reduce production voluntarily due to accidents or losses in the early stage are all resuming production
.
However, due to the impact of social and public events, some new investment projects and resumption of production plans have had to slow down
.
In addition, the resumption of production capacity in Xinjiang, Inner Mongolia, Hubei and other places has also slowed down or shelved the resumption plan
due to social and public events.

According to statistics, the national electrolytic aluminum operating capacity at the end of February was 37.
22 million tons, an increase of 580,000 tons over the end of 2019
.
Although social and public events have affected some production capacity launch plans, it is expected that the capacity increase brought by new investment and resumption of production in March will still be 100,000-200,000 tons
.
Therefore, the production capacity of electrolytic aluminum continues to rise
.

In addition to the demand side, social public events also have a significant impact
on alumina production.
Since the public incident, affected by traffic control and the delay of mine start, the supply of raw materials for the production of many alumina plants in Shanxi and Henan has been forced to reduce or compress production, and the current decompression production level is as high as more than 5.
8 million tons, even if imports continue to increase, domestic alumina supply and demand still turn to a shortage situation
.
With the recent continuous improvement of transportation, the problem of raw material supply has eased, and the production capacity of some aluminum plants has been restored, but the overall situation has not improved significantly, and it is necessary to wait for the full lifting of the traffic ban
.

As public events are gradually brought under control, production has recently resumed across the country, but the resumption of work has been relatively slow
due to the quarantine of returning employees and the fact that transportation between regions has not yet fully resumed.
As of this week, the operating rate of the aluminum processing industry is expected to be around 50%, and it is optimistic that the full resumption of work in the whole country (except Hubei Province) is expected in mid-to-late March
.
As a result, stocks continue to accumulate, and social stocks are expected to return to the order
of 2 million tons.

In addition to the delay in the recovery of domestic consumption, the situation overseas is also not optimistic
.
In the past two weeks, social and public events have spread rapidly overseas, and are currently the most serious in South Korea, Japan, Italy and Iran, of which Iran, as a producer of electrolytic aluminum, has not heard of the production
cut.
However, South Korea, Japan and Italy are all consumer-oriented countries, although the above countries have not yet taken measures to stop work and production, the direct impact of aluminum consumption is small, but the three countries are developed countries, economic status is important, Japan and South Korea are the core countries of the global automobile manufacturing and semiconductor industry supply chain, Italy is also one of
the largest economies in Europe.
Therefore, the impact of the spread of social public events on the economy will not be underestimated, and it will have a negative impact on aluminum consumption, which in turn will also have an adverse impact
on the number of export orders in China.

The impact of overseas social and public events should not be underestimated
.
Different from the small impact of the supply side, the demand side is significantly affected by social public events
.
As of February 27, the national aluminum social inventory (aluminum ingots + aluminum rods) was 1.
623 million tons, an increase of 829,000 tons over before the Spring Festival, and due to inconvenient transportation, the inventory in the factory also had nearly 440,000 tons, which shows that the accumulation range is far beyond expectations
.

On the whole, the domestic supply and demand are weak, the cost side has support, although the demand gradually picked up in March, but the inventory is in a situation of continuous accumulation, the domestic aluminum price rebound momentum is insufficient, and the future market will be at a low level of oscillation
.
If social public events continue to spread and there are more and more affected areas, then the accumulation of inventory will further expand, and the domestic aluminum price will fall to 12500 yuan / ton, corresponding to the price of Lun aluminum at 1600 US dollars / ton
.