Logic behind the recent soaring price of hottest a

Aluminum: the logic behind the recent sharp rise in prices

the main root cause of the recent sharp rise in aluminum prices may be the impact of Russian Aluminum sanctions. In fact, there have been many reports and relevant meetings on this event recently. Here, this paper deduces the logic that the sharp rise of aluminum prices at home and abroad is different from the rise range. There are actually two reasons for the rise of domestic aluminum prices:

First: the pull of the external market. Domestic prices are also driven by the external market. The main reason for the external market driven rise is that the LME price has increased by more than 33%. The Russian Aluminum sanctions and the impact of the US increase on China's aluminum import tariffs have resulted in a shortage of overseas aluminum supply. And judging from the current situation, there is no solution to the shortage for the time being

second: how many Rusal goods are in LME inventory? There is no specific relevant data to study. However, LME's inventory has fallen from more than 5 million tons to more than 1.4 million tons, which is in the process of a historical low. The goods of Rusal in LME are equivalent to a dead stock, so they can't be moved. We do not rule out the risk of a low position in the case of low inventory of Rusal

this article believes that this may also be a subjective point of view. If excluding Rusal's inventory, LME's inventory may fall below 1million tons. Therefore, we don't rule out the risk of a low position, which will cause overseas prices. The LME price and the actual transaction premium price are very high. We heard that the premium traded in Japan has reached $160, and there is a high price of $300 in the United States

China is indeed slow to follow. The main reason for the slow pace is that China's fundamentals are relatively weak. Its rise may be mainly driven by the external market. In the first quarter of 2018, published data showed that China's electrolytic aluminum production did not increase. Even if we consider that the Spring Festival period this year may be relatively late, we will postpone the peak consumption season in March to the end of March, including 20 days after April, and there is no decline in inventory during this period

therefore, the demand is less than expected, and the output has not increased, but the demand has not increased. So there is no obvious decline in inventory at all. We simply calculated the growth rate of China's electrolytic aluminum apparent consumption in the first quarter of 2018. This apparent consumption has no details. According to the growth rate of real estate or automobile, we calculate the apparent consumption according to the simple addition and subtraction method of the current month's output, import volume, surplus inventory and surplus inventory, The calculated growth rate of apparent consumers is only 0.73%

at the end of 2017, everyone wrote an annual report or how to predict the growth rate of electrolytic aluminum demand in 2018, which is expected to be 6% - 7% for the whole year. But at present, the first traditional consumption peak season did not bring demand growth, so China's fundamentals are relatively weak now. If China wants to see demand in the later stage, it may only be driven by exports. One of the early stages of export driven is that the ratio of Shanghai to London is relatively low

this is why the external price will rise faster, while China will follow slower. Only when the ratio of Shanghai to London is relatively low, can China's aluminum ingot inventory be consumed by stimulating China's aluminum products and even reaching the export of aluminum ingots. Let's see the price deduction in the later stage. The Rusal event is still fermenting. In the later stage, the gap of foreign aluminum ingots may continue, and the external market should continue a relatively strong trend. But in China, first, it is driven by the external market. Second, we think it is driven by the cost. Because there is no shortage of aluminum ingots in China, the main source of cost boost, at least for now, may focus on alumina

alumina has two aspects:

first, the impact of Russian Aluminum sanctions on alumina

second, the 6.4 million ton alumina plant in Brazil's hydro pollution incident was forced to reduce production by 30%. This production reduction cycle may last for at least three months

the superposition of these two events will lead to the shortage of overseas alumina supply and the opening of China's alumina export market. We have made a statistics that the annual output of Rusal electrolytic aluminum in 2017 was 3.7 million tons, 97% of which were in Russia, the output of alumina was 7.7 million tons, 35% in Russia, 20% in Ukraine, and 45% in non CIS countries. The annual output of bauxite is 17million tons, 60% of which is in Russia

it seems that Russia has no plan to reduce production in terms of alumina and electrolytic aluminum, and it is looking for a solution. The target is China and the Middle East. But now the raw material supplier of electrolytic aluminum has a very big problem. At present, there is no shipping company, or land transportation company, for the alumina produced outside Russia, that is, the transportation company is willing to ship the goods back to Russia for normal production

in addition, raw material enterprises such as caustic soda, which produce alumina, dare not take the size as phi; 44mm times; 3000mm raw materials are sold to Rusal. So Rusal is now talking about cooperation with China. The way of cooperation is to sell aluminum ingots to China, and then sell Chinese alumina. The output of alumina produced in Russia is only 2.7 million tons, that is, its own electrolytic aluminum production is only enough to maintain the electrolytic aluminum production of 1.4 million tons

that is to say, without the reduction of production of Rusal, electrolytic aluminum and alumina, there will be a gap of 1.5 million tons of alumina. At this time, we will add 30% of the impact caused by the hydro event, that is, 3.2 million tons. Now the alumina gap in the overseas market may be 7.7 million tons. What is the concept of 7.7 million tons? According to our statistics, the global output of alumina in 2017 was 51 million tons except for China, and the overseas gap has accounted for 15% of the overseas output, which has a great impact

after the opening of China's alumina export market, can China's alumina make up for the gap in the overseas market? In 2017, China's electrolytic aluminum output was 36.5 million tons and alumina output was 69 million tons. Taking into account China's import volume, China's alumina supply in 2017 was basically in a balanced state. It may be that the annual output will be richer, but these may be diluted gradually every month and then in the process of transportation

in 2017, China's alumina market was in a balanced state. In the quarter of 2018, we can see that the alumina production capacity put into operation in the first quarter was 1.5-1.8 million tons. In the second and third quarters, it is planned to be put into production, and the implementation of which is very high, ranging from 2.3 million tons to 3 million tons. These two plus one, that is, the output of 5million tons, is far smaller than the gap in the overseas alumina market, and this is only the production capacity put into production, not the output released

although in Guangxi and the Northeast coastal areas, there are many newly planned alumina projects with a production capacity of more than 5million tons. However, at present, the construction is relatively small, all during the planning period, and even if the construction is started now, with funds in place, and the progress is very smooth, it may not be put into production until the end of this year, or even the beginning of next year

there is no solution to the 7.5 million ton alumina gap in the short-term overseas market, which is why the alumina price has risen to a historical high. Although overseas alumina plants may also have very high profits, the resumption of production overseas is slow, because their production stoppages have been stopped at least before 2016, and their production capacity may have to be overhauled before being put into production

we can refer to the plant that Zhongxiang aluminum bought in Jamaica, and its production resumption cycle may take one year. Therefore, whether it is aluminum oxide or electrolytic aluminum, its resumption of production cycle will be relatively long, and this gap cannot be filled in the short term. Under the current environmental background, this gap of alumina cannot be filled temporarily, and the increase of overseas alumina is far greater than that of electrolytic aluminum

China's export window has opened. Now traders are doing it, or group production enterprises have begun to export alumina in succession. What we have learned is that a ship of 30000 tons has gone through this export market. In this week, it can be observed that yesterday's FOB Australian alumina quotation was 710 yuan/ton, with a single day increase of US $610/ton. The transaction price of alumina in Brazil has reached 800 US dollars FOB. Chinese enterprises have also received many such inquiries from foreign investors, because the profits of electrolytic aluminum plants in foreign countries are also very high. So at present, foreign businessmen are in the process of searching for goods, although the iron content or trace elements of alumina produced in Henan or Yunnan of China are different from those produced abroad. However, stimulated by the high profits of electrolytic aluminum, they can now eat food, no matter whether the food is good or bad. Even if the alumina exported by China is of poor quality, it can also be used in overseas alumina as long as it is used to maintain normal production

the current market price of alumina in China may have been reported between 2900-3000 yuan. However, this is the average price quoted by the three stations, which is a price for China electrolytic aluminum plant to purchase alumina for a long order. If you want to buy goods on the spot market now, the price is basically 3200-3300 yuan

this article learned that the purchase price of 30000 tons of alumina exported by China is also between this price, that is, 3200-3300 yuan. In the later stage, alumina still has a trend of rising by a large margin. Therefore, for the price of electrolytic aluminum in China in the later stage, this paper will be a little stronger subjectively. The main reason is not from the demand for electrolytic aluminum, but from the boost of cost. In the long run, this paper may pay attention to whether there will be superposition of power reform in the later stage

second, let's talk about external factors. Will Rusal's aluminum ingots enter China. The trade friction between China and the United States, or the tense situation, is that trump wants to get some benefits from China, and that he wants to be the basis of a negotiation. So this relationship can be eased, but the confrontation between the United States and Russia has a long history. In this environment, without the support of the Chinese government, enterprises dare not take the goods of Rusal openly. Even if there are profits, you can import them privately. In the case of smuggling, the volume will not be very large. Moreover, in the case that no transportation company is willing to transport Russian Aluminum goods, the difficulty factor is also relatively large if you want to transport such a large amount of Russian Aluminum to China

so in the long run, if the Chinese government helps Rusal solve the problem of aluminum ingots, China may also face the impact of sanctions by the United States. I think in this matter, although it is still under negotiation, there is no definite conclusion. Even if it is implemented, I think it will take a long time to discuss, and the implementation will be more difficult

judging from the current market situation, our gap in alumina is