Aluminum prices will rise first and then fall in 2022

In 2022, alumina production capacity will continue to expand, electrolytic aluminum production capacity will gradually recover, and aluminum prices will show a trend of rising first and then falling. The price range of aluminum in London is 2340-3230 US dollars/ton, and the price range of Shanghai aluminum (21535, -115.00, -0.53%) is 17500-24800 yuan/ton.

In 2021, Shanghai aluminum will increase by 31.82%, and its trend can be roughly divided into two stages: from the beginning of the year to mid-October, under the influence of overseas economic recovery, increased exports, dual-control policies on energy consumption, and skyrocketing overseas natural gas prices, aluminum prices continue to rise. ; Since late October, China has intervened in coal prices, the logic of cost support has collapsed, and aluminum prices have fallen sharply. At the end of the year, due to the soaring energy prices in Europe, a rebound has begun.

Alumina production capacity continues to expand

my country’s foreign dependence on bauxite is as high as 65%, and the main sources are Guinea, Australia, and Indonesia. The coup in Guinea in 2021 has not affected the export of bauxite. The Indonesian government has repeatedly mentioned the ban on the export of bauxite. However, due to the high dependence of our bauxite on foreign countries and the high concentration of imports, we need to pay close attention to the risks brought by the unstable overseas political situation.

From January to November 2021, the global alumina output accumulated to 127 million tons, a year-on-year increase of 4.3%, of which my country’s alumina output was 69.01 million tons, a year-on-year increase of 6.5%. In 2022, there are many alumina projects to be put into production at home and abroad, mainly in Indonesia. In addition, the Jamalco alumina refinery with an annual output of 1.42 million tons is expected to restart in 2022.

As of December 2021, my country’s alumina built capacity is 89.54 million tons, and its operating capacity is 72.25 million tons. It is expected that the new production capacity will be 7.3 million tons in 2022, and the resumption capacity is conservatively estimated at 2 million tons.

Overall, the global alumina production capacity is in a state of excess.

In 2021, domestic electrolytic aluminum production capacity will be limited under the influence of power and production restrictions and dual control of energy consumption. As of November 2021, my country’s electrolytic aluminum has a total capacity of 42.83 million tons, with a production capacity of 37.57 million tons, and a capacity utilization rate of 87.7%. From January to November 2021, the domestic production of electrolytic aluminum accumulated to 35.45 million tons, a year-on-year increase of 5.7%.

In 2021, the domestic electrolytic aluminum production capacity that was reduced due to dual control of electricity and energy consumption was about 3.89 million tons.

From January to November 2021, overseas electrolytic aluminum production accumulated to 25.99 million tons, a year-on-year increase of 1.57%. Affected by the energy crisis, as of the end of December last year, European aluminum plants had cut production by more than 700,000 tons. However, due to the increase in profits in 2021, the overseas production and resumption capacity will also increase.

Traditional consumption slows down? New energy demand increases

In 2021, the growth rate of domestic real estate and power investment will decline, dragging down the increase in traditional aluminum consumption. From January to November 2021, the cumulative year-on-year growth rate of the domestic power grid capital construction investment has dropped to 4.1%, and the cumulative year-on-year growth rate of the national real estate development investment has dropped to 6%. Based on the unchanged direction of domestic real estate regulation in 2022, the growth rate of real estate consumption is still facing downward pressure.

With the lightning and electrification of automobiles, the amount of aluminum used in automobiles has increased. According to estimates, the amount of aluminum used in each new energy vehicle is about 85 kilograms more than that of traditional automobiles.

According to the data, from January to November 2021, the amount of aluminum used in domestic automobiles was 2.824 million tons, a year-on-year increase of 5.3%, and the amount of aluminum used in new energy vehicles was 430,000 tons, accounting for 15.2% of the aluminum used in automobiles, an increase of 9% over 2020. It is estimated that in 2022, the consumption of primary aluminum by traditional vehicles will increase by about 130,000 tons, and the consumption of primary aluminum by new energy vehicles will increase by about 160,000 tons.

In terms of photovoltaics, from January to November 2021, the newly installed photovoltaic capacity in China was 34.8GW, a cumulative increase of 34.5% year-on-year. In 2021, the new installed capacity of photovoltaics is expected to be 40GW. According to the forecast of CPIA, in 2022, the global photovoltaic installed capacity will be 180-225GW, the domestic photovoltaic installed capacity will be 60-75GW, and the new aluminum consumption will be about 1.01 million tons.

2022 market outlook

In 2022, the Fed is expected to raise interest rates, and metal prices will be under overall pressure. The domestic fiscal policy is pre-positioned, the infrastructure investment will increase in the first half of the year, and the demand for aluminum will improve. Since the real estate regulation is not relaxed, we can focus on the demand for aluminum from new energy vehicles and photovoltaic industries. The supply-side pays attention to the production of electrolytic aluminum. In the context of “double carbon”, domestic electrolytic aluminum production capacity may continue to be limited, but it is expected to be better than 2021. The estimated volume of production increases and resumption abroad in 2022 is also considerable.

Overall, the gap between the supply and demand of electrolytic aluminum will be narrowed in 2022. It will be tight in the first half of the year and improve in the second half of the year. The aluminum prices will show a trend of rising first and then falling. The aluminum prices range in London is 2340-3230 US dollars/ton, and the Shanghai aluminum prices range is 17500-24800 yuan/ton.