Benefiting from the reform of the supply side of electrolytic aluminum, how flexible is China Aluminums performance?

Zhongtai Securities issued the latest research report that Chinalco relies on its own changes and the in-depth reform of the supply side of electrolytic aluminum. From 2007 to 2017, the company achieved “rebirth”. Pingyin Guanghui Aluminum Co., Ltd., aluminum wire manufacturer, aluminum alloy wire, aluminum-magnesium alloy wire, according to estimates, for every 1000 yuan increase in electrolytic aluminum price, the company's net profit increased by 2 billion yuan; alumina price increased by 100 yuan, the company Net profit increased by 700 million yuan, the company fully benefited from the electrolytic aluminum supply side reform cycle, maintaining its "buy" rating.

2007-2017, the core drawback of the ten-electrolyzed aluminum reborn in the fire is the constant "supply overweight"

Under the influence of the financial crisis and the growing situation of electrolytic aluminum surplus, the enterprise is in a difficult business; 15 years is an important turning point. Through the development of alumina based on resources and the development of electrolytic aluminum based on energy, dynamic cost assessment and implementation The cost-saving sharing-excessive progressive incentive method and other effective methods, the company continues to optimize the industrial layout while stimulating the enthusiasm of employees, the production cost of electrolytic aluminum and alumina decreased from 70% of the previous industry to 40- 45% of the position, turn against the trend to turn profitable.

At the end of 2015, alumina and electrolytic aluminum continued to hit new lows. The production cost of enterprises jumped to the “advanced level” of the industry.

The "three-door" of supply-side reform

There are many market interpretations of the current policy. This paper tends to analyze the supply side reform of electrolytic aluminum from three dimensions, one to strictly control the new production capacity, the second to clean up the illegal production capacity, and the third environmental protection peak production, that is, the reform of the supply side of electrolytic aluminum. Triple door."

The first is to strictly control new capacity. As mentioned above, the problem of electrolytic aluminum is not demand but supply expansion is too fast. How to control new capacity is naturally placed at the top of the policy, which will fundamentally solve the problem of medium and long-term overcapacity in the electrolytic aluminum industry. From the “Guiding Opinions on Resolving the Severe Overcapacity of Production Capacity” in 2013, to the “Opinions on Printing and Distributing the Implementation Measures for the Capacity Replacement of Some Industries with Serious Overcapacity in 2015”, and then to “Building a Good Market Environment to Promote the Non-ferrous Metal Industry Regulations in 2016” The Guiding Opinions on Structures for Transformation and Benefits have all mentioned the need to strictly control new capacity.

In addition, clean up illegal production capacity. In April 2017, the four ministries and commissions, including the National Development and Reform Commission, jointly issued the “Special Action Plan for Cleanup and Rectification of Violating and Regulating Projects in the Electrolytic Aluminum Industry”, and officially started the clean-up of illegal and illegal production capacity. The scope of this special clean-up and rectification is the new illegal project capacity after the “1494” document was cleaned up and rectified in 2015, that is, after May 2013, and the old project that did not implement the document No. 1494.

(Remarks: Document No. 1494 refers to the Notice on Printing and Distributing Opinions on the Treatment of Iron and Steel, Electrolytic Aluminum, and Ship Industry Violation Projects issued by the Development and Reform Commission and the Ministry of Industry and Information Technology in June 2015 (Development and Reform Industry [2015] No. 1494), which is for 2013 The illegal and illegal projects before May of the year clearly put forward the handling opinions)

According to statistics, the total number of illegal and illegal production capacity involved in the country has reached 6 million tons, of which about 5 million tons are already in operation!