onenumberandpowerball| Overseas alumina production fell short of expectations, boosting alumina's rise significantly

Guangfa Futures Research Zhang Ruoyi Z0013119

Market guide: alumina futures rose sharply today, the previous session once touched the limit, by the close, the main 07 contract closed at 4094 yuan / ton, an increase of 5%Onenumberandpowerball.35%.

Driver analysis 1: overseas alumina resumption is not as expected

According to Mysteel research, due to the natural gas pipeline fire near Bauhinia Downs, Queensland, Australia in early March 2024, the reduction of natural gas supply forced two alumina plants in the vicinity of Yarwun and Queensland to reduce production. According to the investigation, the capacity of the two alumina plants is 7.2 million tons / year, and the impact of the accident is about 1.2 million tons / year. It is understood that the two alumina enterprises are expected to resume production around early June, but the local natural gas supply has not yet been fully restored, and production is expected to be postponed to September. In addition, affected by the early production reduction, the two local alumina plants are not allowed to maintain the implementation of the contract through spot purchase. However, due to the insufficient supply of natural gas, the overall shortage of overseas alumina spot and other force majeure factors, the short-term implementation of some contracts between the two alumina plants has been blocked.

Driving analysis 2: domestic mine production is not as expected, bauxite prices rise

According to SMM research, most of the bauxite mines suspended in Shanxi are still in the stage of integration, and some mines are promoting resumption of production, but it is difficult to usher in large-scale resumption of production in the short term, it may be difficult to have a large increase in domestic production in May, and it is not known when it will be able to usher in large-scale resumption of production. Most of the Sanmenxia bauxite mine in Henan area maintains the state of shutdown, and some mines may gradually promote the resumption of production, but the output is very limited, and the progress of resumption of production may be relatively slow, which has a great impact on the market. And this small increase in production is difficult to shake the supply shortage pattern of Jinyu bauxite, alumina smelting enterprises are mainly consumption inventory, raw material inventory decline, bauxite prices rise.

Driving analysis 3: Yunnan has ample power supply and is about to enter a flood season, and the resumption of electrolytic aluminum production is smooth.

In Yunnan's power structure, hydropower accounts for more than 80%, and the production capacity of electrolytic aluminum in Yunnan accounts for about 13% of the country. Although drought warnings have been issued in many places in Yunnan since late March, and the water level has dropped to near the level of the same period last year, thermal power generation in Yunnan has increased significantly year on year since the beginning of the year, making up for the shortage of hydropower. Data from the Yunnan Energy Bureau show that in the first quarter, industrial power generation over the scale of Yunnan was 796.Onenumberandpowerball.55 billion kilowatt-hours, an increase of 6.9 percent over the same period last year, 1.2 percentage points higher than in January-February. Of this total, hydropower generation decreased by 10.9% to 43.463 billion kilowatt hours.OnenumberandpowerballThermal power generation was 16.915 billion kilowatt hours, up 13.5 percent, wind power generation was 14.586 billion kilowatt hours, up 61.2 percent, and solar power generation was 4.691 billion kilowatt hours, up 163.7 percent. The proportion of new energy generation reached a record high of 24.2%, effectively making up for the decline in hydropower. At the same time, Yunnan is about to enter the flood season in June, the power supply will be more adequate, coupled with the rich profits of aluminum plants, which is conducive to the resumption of production of electrolytic aluminum enterprises and lead to the growth of alumina demand.OnenumberandpowerballWe estimate that since March, the production capacity of electrolytic aluminum has resumed to more than 700000 tons.

Looking to the future:

Domestic alumina is basically self-sufficient, the degree of import dependence is low, and the short-term impact of overseas production reduction is small. Domestically, the current alumina smelting profits are high, alumina plants are highly motivated to resume production, but the current resumption of domestic mines is not as expected, domestic bauxite inventory has declined, and bauxite prices have risen. At the same time downstream electrolytic aluminum production, in addition, futures rising water to increase the willingness of the holder to deliver, aggravating the spot tension, it is recommended to hold more single.

Risk hint: the resumption of domestic bauxite production exceeded expectations.

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