Aluminum price has been a good non-ferrous variety since this year, especially since April. Whether it can maintain its rising trend in the future depends mainly on downstream demand and re-production capacity. On the demand side, the recovery of real estate is relatively strong, and the marginal increase of re-production capacity is relatively weak. Aluminum prices are expected to fluctuate strongly in the second quarter.
| Melamine |
Macroscopic data is better
In April, China’s official manufacturing industry PMI was 50.1, down 0.4 percentage points from last month, and remained in the expansion range for two consecutive months, but the extent was weakened; in March, China’s M2 grew by 8.6% year-on-year; in March, China’s social financing scale increased by 2.86 trillion yuan, 1.28 trillion yuan more than the same period last year. Among them, M2 and social finance data are more than expected.
From the perspective of electricity consumption, China Telecom Union disclosed March 2019 electricity data: in March, the total social electricity consumption was 573.2 billion degrees, an increase of 7.5% over the previous year, which exceeded expectations. From January to March, electricity consumption was 1.6795 trillion yuan, an increase of 5.5% over the same period last year. In March, China’s electricity generation was 569.8 billion degrees, up 5.4% year-on-year; in January-March, it was 1.6747 trillion degrees, up 4.2% year-on-year.
In terms of railway freight volume, the cumulative year-on-year rates of January, February and March 2019 were 8.2%, 3.3% and 3%, respectively, showing a weak recovery. In January, February and March of 2019, the RMB loan balances of China’s financial institutions were 87.18 trillion, 87.92 trillion and 89.03 trillion respectively, with an increase of 14% year on year, which was relatively neutral. At present, broad credit is still conducting downward, and the sustainability of tax cuts and fee cuts is strong, and China’s economy will continue to recover.
“Xiaoyangchun” in the real estate market
| EDTA |
Aluminum for construction accounts for about 33% of the total consumption of aluminium in China. According to the statistics bureau, the investment in real estate development increased by 11.8% from January to March, which was higher than 11.6% from January to February, and the new construction area increased by 11.9% from January to February, which was significantly higher than 6% from January to February. From January to March, the sales area of commercial housing decreased by 0.9% compared with the previous two months, and the sales volume of commercial housing increased by 5.6% compared with the previous two months, and by 2.8% in the previous two months. At the end of March, the area of commercial housing for sale was 516.46 million square meters, down 9.9% from the same period last year.
According to the survey data of housing enterprises, in the first four months of this year, sales of 75 Housing enterprises exceeded 10 billion yuan. Among them, sales of five leading housing enterprises, including Biguiyuan, Vanke, Hengda, Poly and Rongchuang, exceeded 100 billion yuan. While sales remained stable, real estate enterprises took land actively, and the phenomenon of land premium rate exceeding 100% reappeared. Eighteen enterprises took land more than 5 billion yuan in a month, which broke the monthly record of land market in the past year or so. Among them, Rongchuang, Biguiyuan, Xincheng, Zhonghai, Huarun, Greentown, Rongsheng, Jindi and other eight enterprises have more than 10 billion yuan in land.
This is closely related to the marginal improvement of financing channels for housing enterprises. In April, the intensive release of financing by housing enterprises approached 260 billion yuan, and the scale of financing approached 850 billion yuan. However, due to the high leverage rate of Chinese residents and the positioning of the central “housing is not speculative”, the “Xiaoyangchun” property market will be difficult to sustain for a long time, but it will still support the aluminum price in the medium term.
| Azodicarbonamide (AC foaming Agent) |
Power electronics and transportation accounted for 14% and 12% of China’s aluminium consumption, respectively. According to data from China Ride Federation, retail sales of generalized passenger cars in March were 1.78 million, down 12% from the same period last year, falling for 10 consecutive months, showing a cliff stall, and the automotive industry has yet to see a turning point. According to the State Grid Corporation’s Social Responsibility Report 2018, the State Grid’s planned investment in 2019 is 512.6 billion yuan, an increase of 4.84% over last year’s actual completion, which is relatively neutral.
Resumption of production
With the rapid rise of aluminium price since April, the profit level of electrolytic aluminium industry has recovered to a certain extent, but it is not enough to stimulate large-scale resumption of production. The current time also corresponds to the successive resumption of production capacity of Weiqiao in Shandong Province due to its shutdown in response to the policy of production restriction in autumn and winter. In November 2018, Weiqiaoguan in Shandong Province shut down production capacity of about 500,000 tons. On April 15, Shandong Province Announcement Document “Announcement on 542,000 tons of capacity replacement scheme for electrolytic aluminium in Shandong Weiqiao Aluminum and Electricity Co., Ltd.” According to the plan, Weiqiao in Shandong Province needs to dismantle its original capacity after the replacement capacity is put into operation, and the expected start-up time is 6 months. This capacity is expected to put pressure on aluminium prices after the second quarter.
In the first quarter of this year, the cumulative production of domestic electrolytic aluminium was 8.633 million tons, a decrease of 1.2% compared with the same period last year. Among them, the output in March was 2.981 million tons, down 1.5% from the same period last year. As supply and demand remain tight, the second quarter fundamentals remain optimistic. However, due to the widespread expectation that higher aluminium prices will stimulate more large-scale re-production, and Weiqiao replacement capacity is approaching, it is expected that the price of aluminium will be dominated by strong shocks.
| EDTA 2Na |