Aluminum prices hit a 10-year high, why?

The military coup in Guinea pushed aluminum prices to a 10-year high on Monday, but LME aluminum and Shanghai aluminum futures failed to extend the rally on Tuesday. So today we're going to talk about aluminum.

Small to beverage cans, large to aircraft, construction, aluminum is widely used in various fields of life and production. Prior to the outbreak, the global aluminum market was in the midst of an oversupply, with aluminum prices entering a downward trend since peaking in 2018.

But the sudden outbreak disrupted the supply and demand situation in the market, on the one hand, demand with the economic unsealing concentrated release, on the other hand, the global supply chain disruption exacerbated the shortage situation in some areas, thus further pushing up prices.

As the global aluminum demand center shifts from Europe and the United States to Asia, the London Metal Exchange has moved aluminum stocks from Rotterdam in the Netherlands and other places to Malaysian warehouses to get closer to the Asian market. However, since the beginning of this year, the global logistics supply chain has been affected by factors such as port congestion and container shortages, and it is difficult for aluminum stocks far away in Asia to reach Western markets such as Europe and the United States.

Worldwide, bauxite is mainly distributed in Guinea, Australia, Brazil, China, Greece, Guyana, India, Indonesia, Jamaica, Kazakhstan, Russia, Suriname, Venezuela, Vietnam and other regions. Among them, Guinea (7.4 billion tons of proven bauxite reserves), Australia (6.5 billion tons of proven bauxite reserves) and Brazil (2.6 billion tons of proven bauxite reserves) account for about 60% of the world's total proven bauxite reserves.

Guinea is the world's leading supplier of bauxite, and its bauxite exports to China are almost tied for first place with Australia. Guinea is rich in bauxite and iron ore resources, and many mining giants around the world have invested heavily in Guinea to mine iron ore and bauxite. According to government data, Guinea exported 82.4 million tons of bauxite to the world last year, and 56.25 percent of China's bauxite imports in the first half of the year came from Guinea.

After more than ten years of barbaric growth, China's alumina industry has gradually entered a mature period. The output of China's alumina industry has gradually stabilized and the growth rate has gradually slowed down. According to the National Bureau of Statistics, China's alumina industry produced 73.132 million tons in 2020, up 0.91 percent year-on-year, and 25.799 million tons in January-April 2021.

The demand for resources still maintained a certain degree of growth during the global financial crisis, but due to the rapid development of bauxite mines, alumina, and electrolytic aluminum industries, production capacity has increased sharply, and market demand has been sluggish, resulting in serious overcapacity, making the world aluminum industry Especially the growth rate of the bauxite industry has slowed down significantly. According to the data, global electrolytic aluminum production will be 65.409 million tons in 2020, up 2.69 percent year-on-year, and 22.215 million tons in January-April 2021.

From the perspective of domestic supply, the expansion of electrolytic aluminum production capacity is constrained, mainly in two aspects: "power shortage" and "carbon cutting. On the one hand, many provinces and urban areas of power rationing measures led to electrolytic aluminum enterprises power shortage can not be full capacity production; on the other hand, in 2021, carbon neutral, carbon peak officially landed, energy consumption double control to some aluminum smelting industry affected, electrolytic aluminum production costs rise, promote electrolytic aluminum prices continue to rise.

In the context of limited supply, the demand for aluminum continues to increase, especially the use of new energy has become a new growth point for aluminum consumption. It is understood that my country's automobile industry has gradually shifted its focus to lightweight. According to the consumption of bicycles, in 2018, the new energy bus industry will consume a large amount of aluminum. It is estimated that the aluminum consumption of passenger cars will be 210kg, and the aluminum consumption of hybrid buses will be 179.6kg. The aluminum consumption of BEV buses and ICE buses are 128.4kg and 118.7kg respectively. However, compared with the United States, Japan and other developed countries, there is still a big gap in the amount of aluminum used in Chinese cars.

However, according to statistics, the aluminum consumption of new energy vehicles in China is increasing year by year. From January to July 2021, the production and sales of new energy vehicles in China reached 1.504 million and 1.478 million respectively, exceeding the annual production and sales of 1.366 million and 1.367 million vehicles in 2020, reaching a record high. Therefore, there is still much room for growth in the demand for aluminum for new energy vehicles in the future.

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Shandong Dongxin Aluminum Co., Ltd

In order to adapt to the rapid development of the photovoltaic market, Shandong Dongxin Aluminum Co., Ltd. was established in 2015, specializing in providing high-quality aluminum and steel products such as frames, brackets and accessories for photovoltaic industry enterprises.

Dongxing Products

After 30 years of continuous research and development, Dongxing Aluminum Group's aluminum profiles and hardware deep processing varieties have reached more than 60000; with the establishment of the assembly workshop, Dongxing has its own mature products, which are widely used in electronics, Electrical appliances, machinery, automobiles, new energy and other fields.