Aluminum prices may rise and then fall throughout 2022
It is expected that throughout 2022, with the expansion of alumina production capacity and the recovery of aluminum production capacity, LME aluminum and SHFE aluminum will fluctuate between US$2,340-3,230/ton and RMB 17,500-24,800/ton respectively. The price will show an inverted V-shaped chart.
SHANGHAI, January 13 - LME aluminium and SHFE aluminium are expected to be between US$2,340-3,230/tonne and RMB17,500-24,800/tonne, respectively, for the full year 2022 as alumina capacity expands and aluminium capacity resumes fluctuation. The price will show an inverted V-shaped chart.
Shanghai Futures Exchange Aluminum will rise by 31.82% in 2021, and the trend can be roughly divided into two stages. From the beginning of the year to mid-October, aluminum prices continued to rise due to factors such as overseas economic recovery, export growth, energy consumption, and skyrocketing overseas natural gas prices. Since the central government began to regulate coal prices in mid-October, aluminum prices have plummeted, and cost support has collapsed. However, prices rebounded at the end of the year amid soaring energy prices in Europe.
Domestically, about 65% of the domestic bauxite supply is imported from overseas, mainly from Guinea, Australia and Indonesia. Guinea's coup in 2021 has not affected its bauxite exports. The Indonesian government has repeatedly mentioned banning the export of bauxite, but if this part can be made up by importing from other countries, the impact on domestic bauxite supply is also small. Nevertheless, the market still needs to pay close attention to the risks posed by the unstable political situation overseas, and China's bauxite is heavily dependent on imports.
From January to November 2021, the global alumina output was 127 million tons, a year-on-year increase of 4.3%, of which China's alumina output was 69.01 million tons, a year-on-year increase of 6.5%. In 2022, a number of alumina projects at home and abroad will be put into production, most of which are located in Indonesia. In addition, the Jamalco alumina refinery with an annual capacity of 1.42 million tons is expected to restart in 2022.
As of December 2021, China's alumina installed capacity is 89.54 million tons, with a production capacity of 72.25 million tons. It is estimated that 7.3 million tons of new production capacity will be added in 2022, and a conservative estimate of 2 million tons of production capacity will be restored.
Global alumina overcapacity.
In 2021, domestic aluminum production capacity will be limited by power curtailment and dual control of energy consumption. As of November 2021, Chalco had a total installed capacity of 42.83 million tons, a production capacity of 37.57 million tons, and a capacity utilization rate of 87.7%. From January to November 2021, domestic aluminum production was 35.45 million tons, a year-on-year increase of 5.7%.
Traditional consumption slows down? New energy industry demand growth
In 2021, the growth rate of domestic real estate and power investment will decline, and aluminum consumption will be under pressure. Under the condition that the domestic real estate regulation direction remains unchanged in 2022, the growth rate of real estate consumption will still face downward pressure.
But new energy has huge potential.
For example, the data shows that from January to November 2021, the aluminum consumption of the domestic automobile industry was 2.824 million tons, a year-on-year increase of 5.3%. It is estimated that in 2022, the traditional automobile industry will increase the consumption of primary aluminum by about 130,000 tons, and the new energy automobile industry will contribute about 160,000 tons of increased consumption.
Looking forward to 2022, the pace of interest rate hikes by the Federal Reserve is expected to accelerate, and metal prices will be under pressure as a whole. In terms of Chinese fiscal policy, in the first half of 2022, infrastructure investment will increase and aluminum demand will improve. As the real estate regulation will maintain the current level, the market may pay attention to the growth of demand for aluminum in the new energy vehicle and photovoltaic industries. Supply-side concerns for aluminium production, including carbon peaking and carbon neutral strategies, are expected to limit aluminium capacity, but the overall picture is expected to improve from 2021.