Fundamentals are still good, and the aluminum market is expected to continue to rise

Since the beginning of April, the aluminum has risen steadily, breaking through the integer mark of 14,000 yuan / ton
.
From the supply side, the price of alumina, the main raw material, continues to rise, which will increase the production cost of electrolytic aluminum and provide support
for aluminum prices.
Although the current electrolytic aluminum smelting enterprises are profitable, there is not much resumption of production and new production capacity, and there is little pressure from the supply side
.
From the demand side, China's epidemic has been basically controlled, the economy has gradually returned to normal, aluminum market related downstream demand such as automobiles, real estate has also improved, the construction of new infrastructure, will also stimulate part of aluminum demand
.
On the whole, the fundamentals of the aluminum market are still good, and the main contract of Shanghai aluminum in 2008 is expected to continue to rise to around
the 14300 yuan / ton line.

Since April 10, China's alumina prices have continued to rebound, as of July 3, the average price of alumina in Shanxi, Henan and Guiyang reached 2336.
67 yuan / ton, mainly because the price of electrolytic aluminum continued to pick up and the demand for alumina by electrolytic aluminum smelting enterprises increased
.
In addition, the recent forced shutdown of Shanxi alumina enterprises has also contributed to the waves
.

In terms of production costs, it is estimated that the average cost of electrolytic aluminum production is 11295.
46 yuan / ton, the average profit of electrolytic aluminum is 2996.
54 yuan / ton, the current production cost of electrolytic aluminum is at the second lowest level in 5 years, and the profit level of electrolytic aluminum is at the highest
level in 5 years 。 Generally speaking, the considerable profits of electrolytic aluminum manufacturers will stimulate their willingness to produce, resulting in an increase in the supply of electrolytic aluminum, but according to Baichuan Information, as of July 2, In 2020, the total production scale of electrolytic aluminum in China will be 1.
875 million tons, 562,200 tons have been resumed, 1.
3158 million tons will be resumed, and it is expected that 1.
3008 million tons will be resumed within the year, the new production capacity of electrolytic aluminum has been completed and to be put into production is 1.
55 million tons, 770,000 tons have been put into production, and 780,000 tons of new production capacity has been built, while China's effective production capacity of electrolytic aluminum (calculated by devices with production capacity) is 47.
9 million tons, and 36.
5934 million tons
have been started.
It can be seen that the resumption of production capacity and new production capacity are actually not much, and the total proportion of the two in the total production capacity is not large
.
In terms of output, data from the National Bureau of Statistics showed that in May, China's electrolytic aluminum production was 2.
977 million tons, an increase of 0.
34% month-on-month, a year-on-year decrease of 0.
10%, and a year-on-year growth rate of 2.
5 percentage points
lower than last year.
From January to May, China's cumulative output of electrolytic aluminum was 14.
808 million tons, an increase of 2.
10% year-on-year, and the year-on-year growth rate decreased by 0.
6 percentage points
from last year.
The growth rate of electrolytic aluminum supply slowed down
compared with the same period last year.

In the short term, the considerable level of profitability will not yet put pressure
on aluminum prices.

The auto market and real estate market continue to recover
.
In May, vehicle production totaled 2.
187 million units, up 18.
2% y/y, and sales totaled 2.
194 million units, up 14.
5
% y/y.
In terms of real estate, from January to May, the cumulative completion of real estate development investment was 4.
591959 billion yuan, down 0.
30% year-on-year; The completed area of housing was 236,871,200 square meters, down 11.
3% year-on-year, and the cumulative growth rate of completed housing area in the same period of 2019 increased by 1.
10 percentage points
year-on-year.

In addition, aluminum is also used
in new infrastructure construction, namely 5G base station construction, UHV, intercity high-speed railway and urban rail transit, new energy vehicle charging piles, big data centers, artificial intelligence, industrial Internet and other fields.
With the continuous construction of China's new infrastructure, it will also give a certain boost
to aluminum demand.

In summary, the resumption of electrolytic aluminum production and new production capacity are not much, the increase in supply is limited, and the performance of terminal demand such as automobiles and real estate continues to pick up, which boosts aluminum prices
.
In addition, China's epidemic has been basically controlled, and the economy has gradually returned to normal track, which is also good for aluminum prices
.
Overall, boosted by good fundamentals, aluminum prices are expected to continue their rally
.