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Analysis of China's electrolytic aluminum production capacity changes in the first half of 2020

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     According to statistics, as of the end of June 2020, China's total electrolytic aluminum production capacity was 41.155 million tons/year, an increase of 3% year-on-year. Operating capacity was 36.914 million tons/year, an increase of 1.19% year-on-year. The increase in completed production capacity is more obvious, indicating that China's electrolytic aluminum production capacity is in a period of rapid expansion from 2019 to 2020, and the operating capacity growth rate is relatively small, mainly due to the large-scale force majeure factor reduction after July 2019, and part of the production capacity It has not yet been restored. At the same time, some production cuts also occurred in the first half of 2020.

   From January to June 2020, the operating capacity of electrolytic aluminum in China increased by 729,000 tons/year, of which 680,000 tons/year was newly invested, 840,000 tons/year was resumed, and 791,000 tons/year was reduced.

Due to the impact of the epidemic in the first quarter, the efficiency of new project construction has declined, and the time for the completion and launch of production capacity has been delayed. The sharp drop in aluminum prices has also caused some enterprises to actively arrange for maintenance and adjustment of production. At the same time, some of the planned production capacity will be temporarily watched in the first quarter. Therefore, the increase and decrease of the overall operating capacity in the first quarter remained stable, only increasing by 84,000 tons/year.

   After the second quarter, aluminum prices rebounded sharply, the industry's profitability continued to increase, and the domestic epidemic situation was effectively controlled. New electrolytic aluminum projects were in full swing and were put into production. At the same time, the production capacity in the early stage of production suspension has begun to resume production. The reduction in production and maintenance due to market factors came to an abrupt halt. In the second quarter, the operating capacity increased rapidly, a significant increase of 645,000 tons/year.

   New investment capacity analysis

   The newly invested production capacity has increased significantly since the end of May, with an increase of 295,000 tons/year in June alone. The newly invested production capacity in the first half of the year was mainly concentrated in southwestern regions such as Yunnan and Sichuan. Yunnan Aluminum Yixin, Yunnan Shenhuo, Wenshan Aluminum and Guangyuan Linfeng were the main production capacity contribution points. Among them, Yun Aluminum Yixin's 400,000 tons/year production capacity was fully reached in the first half of the year, Yunnan Shenhuo's first two stages of 300,000 tons/year production capacity were fully put into operation in early July, and Wenshan Aluminum's first two districts were all put into production in the first half of the first phase. All the 250,000 tons/year relocated production capacity was put into operation in the first half of the year. At the same time, from the perspective of the tracking of new projects, driven by high industry profits and local policies, the production of electrolytic aluminum projects will accelerate in the second half of the year, especially in the third quarter, the performance will be more concentrated. Yunnan Shenhuo, Wenshan Aluminum, Yunhai Haixin, Hongtai New enterprises in Yunnan, such as Aluminum and Yunnan Qiya, will continue to accelerate the pace of production. The 250,000-ton/year project of Guangyuan Zhongfu in Sichuan and the first 150,000-ton capacity of Ingen Mongolia’s Chuangyuan Metal will also be put into production in the third quarter. It is expected that July-September The total new investment capacity reached 1.15 million tons/year.

Analysis of China's electrolytic aluminum production capacity changes in the first half of 2020

In the first half of the year, the total output was reduced by 791,000 tons per year. From the point of view of the reduction in production, the production was reduced by 270,000 tons per year due to losses, 210,000 tons per year due to force majeure, and 31.1 tons per year due to the overhaul of the electrolytic cell. The sharp fall in aluminum prices in the first quarter caused the entire industry to quickly fall into a large-scale loss. However, due to the rapid decline in aluminum prices and the support of continued profits in 2019, aluminum manufacturers are not willing to actively reduce production due to short-term losses, but most choose During this period, the rotation of the electrolytic cell was not a real reduction in production, and the impact on production was not obvious. In addition, in the first half of the year, there were some production cuts due to accidents and bad weather. In the past two years, production cuts due to accidents have continued to occur, and most electrolytic aluminum companies have begun to strengthen the management of technology and equipment. It is expected that, in the context of the continued high profits of the industry, it will be difficult for the market to reduce production in the second half of the year.

Analysis of China's electrolytic aluminum production capacity changes in the first half of 2020

  In the first half of the year, a total of 840,000 tons/year of resumption of production was distributed in each month, which also shows that the resumption of production depends more on the profit and loss of the enterprise itself. At the beginning of the outbreak at the beginning of the year, some enterprises still actively resumed production capacity. After the rebound in aluminum prices, the number of production restarts is even greater. Among them, the limited production capacity in the heating season was restarted by 100,000 tons per year. In 2019, the reduced production capacity due to weather factors and accidents recovered by 460,000 tons per year. Among the reduced production capacity in the first half of 2020, 280,000 tons per year was resumed quickly. (Because some enterprises adopt rotation maintenance, slot stop and slot start at the same time, this part is ignored in the production reduction and resumption of production). It is expected that with the high operation of aluminum prices, enterprises will be more active in resuming production. In addition to the production capacity replacement within the enterprise to reduce production capacity, production reduction capacity caused by other factors has a higher possibility of resumption.

Analysis of China's electrolytic aluminum production capacity changes in the first half of 2020

  Based on the changes in operating capacity in the first half of the year, it is estimated that China's electrolytic aluminum output in the first half of 2020 will be 18.15 million tons per year, an increase of 1.34% year-on-year. With the further accelerated release of operating capacity in the second half of the year, considering each project's production schedule and production contribution cycle, it is expected that the annual production range of electrolytic aluminum will reach between 3720-37.4 million tons, an increase of 3.5%-4.0% compared with 2019. .

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