Report summary:

Since March, the operation of aluminum overseas manufacturers has repeatedly become the focus of the market. The normal operation of Hydro, Rusal and Alcoa was interrupted, causing different price shocks to the market. Since August, in the case of Hydro’s production cuts and RUSAL sanctions continued, and Alcoa’s sudden strike, alumina prices soared and continued to maintain net exports. However, the high production profit stimulation of overseas manufacturers and the new capacity in the long-term can not be underestimated. Domestic manufacturers have disadvantages such as cost and policy. The net export of alumina is difficult to maintain for a long time, and the cost hype caused by alumina is also Unsustainable, for Shanghai Aluminum, the cost is more back to the bottom support.

Since March, the alumina export window has continued to open. According to customs data, from January to July 2018, alumina exports totaled 346,600 tons, an increase of 1034.4% over the previous year. In the case of relatively tight domestic supply, exports are still sustainable, indicating that the shortage of alumina in the international market is even worse. There are even some opinions in the market that China may become a net exporter of alumina in the long run. Can the net export of alumina be maintained? Is the shortage of alumina in the international market continuing? Based on the international supply side of alumina, this paper will make a reasonable prediction of the future supply of alumina in the world by analyzing the operation of major international aluminum giants.

1. The production of the overseas Big Three is limited, and the supply of alumina in the international market is tight.

In the past two months, in the case of a shortage of domestic ore supply and high bauxite prices, the cost has pushed the price of domestic alumina to remain high. At the same time, overseas alumina prices have continued to rise, and the average price of port alumina FOB is 8 The monthly climb climbed to 640 US dollars, and the widening of the internal and external spreads has also become an important factor in stimulating the upward movement of alumina. The shortage of alumina in the early stage of the overseas market is inseparable from the production dynamics of major international alumina producers:

First, Hydro’s production cuts are still going on. Since February, Hydro’s alumina plant in Argentina, Alunorte, was ordered by the Brazilian government to cut production by 50% due to environmental problems. Hydro and the Brazilian government have been in the process of negotiating tug-of-war. According to Hydro’s second quarter report, the recovery time of the capacity has not yet been determined. From the quarterly report released by Hydro, it was observed that its alumina output in the first quarter was 1.277 million tons, down 12% from the previous year; the second quarter was 829,000 tons, down 35% from the first quarter and 47% from last year. As Alunorte produces all of Hydro’s own alumina, the nearby Paragominas bauxite and Albras electrolytic aluminum plants are also produced at 50% capacity due to reduced production at the plant. It is still uncertain whether Hydro will be able to resume full production in October. According to the 2017 production, as of now, Hydro’s production reduction has caused at least a reduction in the production of 1.53 million tons of alumina in the international market, even if it is fully restored by the end of October. This will result in a reduction in the actual supply of approximately 550,000 tons. On September 5, Hydro’s Alunorte alumina plant signed two agreements with the Brazilian government, including the Code of Conduct (TAC) and the Social Obligation (TC). Although it is still not confirmed, Hydra regards this. The two articles are important milestones in advancing the negotiations.

Second, the prospect of Alcoa strikes is unclear. On August 8th, Alcoa’s three alumina plants in Western Australia and two bauxite mines went on strike. Alcoa urgently mobilized temporary workers to take over production. Although short-term does not affect the output of alumina and bauxite, but the union Negotiations with Alcoa have not been agreed and are still in the negotiation stage. Alcoa’s Western Australian industry has a strong global position. In 2017, the three alumina plants in the area have a total capacity of 8.98 million tons, accounting for 54% of Alcoa’s alumina production capacity; two bauxite productions of 33.20 million tons, accounting for 74%. % bauxite production capacity. Shipments that have been shipped out of Australia have been affected, making the supply in overseas markets even worse. On September 7, Alcoa’s alumina plant in Western Australia and local unions voted on the new employment agreement. The vote did not reach a consensus. Local unions said workers would continue the strike since August 8.

Third, the Russian aluminum sanctions are pending. Since the U.S. Treasury Department announced sanctions against RUSAL on April 6, it has not yet been fully resolved. In October, the U.S. will make a final ruling. In terms of 2017 production, Rusal has contributed more than 6% of alumina to the global market, and more than 70% of its production capacity is outside Russia. If the sanctions cannot be resolved, the trade of overseas alumina is bound to be affected. Aluminum has a difficult road to sales, resulting in a shortage of overseas markets. On the evening of September 12, the market suddenly reported that Rusal was sanctioned or dismissed by the United States, and the price of Lun aluminum quickly retraced, but the Russian aluminum official did not comment on this.

From the latest developments of Rusal, Hydro and Alcoa, Hydro and RUSAL have released positive signals to resume normal operations, while Alcoa News is relatively negative. Will Alcoa’s strike continue for a long time, thus affecting the supply of overseas alumina in the medium and long term? We analyze in detail the production profit and capacity operation of overseas manufacturers.

2. The profit margin of overseas alumina production is considerable

Although Alcoa’s strike is continuing, we believe that in the context of the current high-yield production of overseas alumina, Alcoa has a positive attitude toward strikes, or made large concessions, and the possibility of a long-term strike is small.

Different from the tight supply of bauxite caused by domestic environmental protection policies, the supply of overseas bauxite is very sufficient, and mature manufacturers have a complete industrial chain from bauxite to electrolytic aluminum, ensuring that alumina can be stably and stably sold at a low price for a long time. Production of electrolytic aluminum. From the cost observations announced by the overseas first-tier alumina producers, South 32 has the lowest production cost. The average production cost in 2017 is about US$200/ton, and the average annual cost of Rusal in 2017 is about US$270. After 2018, the cost will be The innovation is low, and it has fallen to around $230 in the first half of the year. Alcoa and Hydro also announced the cost and price. In the first half of the year, as the alumina price went up, Alcoa alumina’s profit margin has approached 40%. After Hydro’s production cuts, the production cost has risen rapidly, resulting in a lower profit margin. The half-year profit margin remained at around 15%. Other big manufacturers have not clearly stated the cost of alumina production, but Rio Tinto and Vedanta have repeatedly mentioned that they have low cost advantages, and production costs are distributed among the top quartiles of world manufacturers.

Can the strike or shutdown be maintained for a long time under the high profit of alumina? Starting from the maximization of the interests of the manufacturers themselves, it is a reasonable choice for a “rational person” to take measures to resume normal operations as soon as possible. In fact, from the two contracts signed between Hydro and the Brazilian government, we can glimpse the company’s eager hope for a return to production. From the two agreements between Hydro and the Brazilian government, all investment, cost and fines in the TAC are estimated to be 160 million Yarel ($38.43 million), in addition to 250 million Yarel (600,500). The financial reserve for the US dollar; in the Social Obligations (TC), Hydro has committed to invest 150 million Yarel ($36.03 million) for urban infrastructure projects. In both agreements, Hydro has decided to pay at least $130 million. Come to work for the resumption of production.

Hydro is willing to pay a huge sum of money to resume production, naturally because the resumption of production can bring higher returns. Compared with Hydro, Alcoa’s alumina profit is even more impressive. In the second quarter of 2018, alumina sales profit has approached 40%. In terms of volume, Alcoa is the largest alumina producer in the world. In 2017, the annual output of alumina is 13.7 million tons. The ratio of alumina to electrolytic aluminum is as high as 4:1, which means that in addition to its own use, Alcoa annually There are still nearly 7 million tons of alumina exported. Australia’s three alumina plants account for 54% of Alcoa’s total alumina production capacity and are prominent in Alcoa’s aluminum industry chain. Under the double pressure of high profits and high output, we believe that even if the results of the first trade union negotiations are not satisfactory, Alcoa still has the motive to make greater concessions, and the strike in Western Australia may not be long-term.

3. Long-term supply pressure still exists

Under the stimulation of high profits, does the manufacturer have the possibility of expanding production? We reviewed the latest annual or quarterly reports of major international manufacturers, and sorted out the projects with clear new capacity in the aluminum industry chain. We found that although there is no need to worry too much during the year, supply pressure still exists in the long run.

In 2013, aluminum prices continued to slump for two years, and some international manufacturers have stopped production or sold assets in order to cope with losses. Beginning in 2015, with the start of China’s supply-side reforms, aluminum prices began to rise, and manufacturers began to resume production and construction of different sizes. From the published report, the world’s nine major manufacturers disclosed a total of 10.85 million tons of new alumina production and production capacity, and electrolytic aluminum production capacity of 3.85 million tons. From the construction cycle and production time, most of the new production capacity exists in the long-term cycle, and the absolute increment is small during the year. However, compared with the policy environment at home and abroad, the growth of long-term overseas production is not expected to be underestimated.

The world’s bauxite reserves are abundant, and overseas manufacturers do not have the trouble of environmental protection and rectification. From the perspective of the entire electrolytic aluminum industry chain, there is no shortage of raw materials. In addition, the supply-side reform only determines the ceiling of China’s electrolytic aluminum production capacity. The increase in production by overseas manufacturers is not limited, so there is no upper limit for electrolytic aluminum production capacity. More importantly, with the reduction of China’s supply, global aluminum prices have been raised, and the overseas aluminum producers’ industrial chain profit margins are generally higher, and manufacturers have sufficient incentives to expand production to obtain higher returns. With power and unlimited, the supply of long-term overseas alumina and electrolytic aluminum can not be underestimated. Compared with overseas giants, domestic manufacturers have many disadvantages such as cost and policy. China does not have the necessary conditions to become a long-term net exporter of alumina.

4. Domestic alumina prices have a risk of falling back

The domestic alumina price is mainly due to the mine rectification and environmental supervision in Shanxi. The supply of bauxite in the northern region is tight. In line with the negative news of the overseas giants, internal and external linkages began. At the end of June, domestic alumina prices went out of two. Round up. Since September, the tension in the northern ore has eased slightly, the price of bauxite has remained high, and domestic companies have increased their overseas ore procurement. In addition, the expectation that Hydro and RUSAL will resume normal operations will cause overseas alumina prices to start to fall, and the internal and external price gaps will shrink. The internal and external factors of the price of Lido alumina in the previous period have been weakened to varying degrees. The domestic alumina price is no longer rising, and the alumina price has a risk of falling back considering the speculation part driven by the external price difference in the previous period.

Looking at the price of electrolytic aluminum, the heat of the cost of alumina in August has faded. After entering September, the drag on consumption has become more apparent, and Shanghai Aluminum has entered the downward channel. In the short term, it is difficult for alumina to bring upward momentum to Shanghai Aluminum, and as prices fall, it may increase the downward trend of the disk. However, as the first major cost item of electrolytic aluminum, the absolute price of alumina is still at a high level in the year. The absolute cost of electrolytic aluminum is still high. There is a large loss in the industry, and the cost still has a bottom support for the price. In the short-term, after the cost returns to the bottom support, we believe that the space under Shanghai Aluminum 14500 is small, there is stocking in the downstream before the festival, the inventory of aluminum ingots is faster, and the macro level is good news, Shanghai aluminum may rebound.

According to the British “Financial Times”, Barrick Gold, the world’s largest gold company, acquired South Africa’s Rand Gold Resources Company for $6 billion. Barrick Gold Executive Chairman John Thornton said the deal It will merge the world’s largest “Grade 1” gold assets with a market capitalization of US$18 billion.

Under the agreement, Rand Gold shareholders will receive 6.128 shares of Barrick Gold in stock per share. The existing shareholders of Barrick will hold 64% of the combined company and become the largest shareholder. Randy Gold shareholders will hold the remaining 36%.

It is worth noting that in the past year, Barrick’s share price fell 25% and Rand Gold fell 34%.

Since mid-April this year, due to the impact of a strong dollar, hedging demand has flocked to the US dollar, pushing up the US dollar index and suppressing gold.

The two giants “shaking hands and saying joy” are also hoping to re-energize investors’ downturn in over-expenditure and poor earnings over the years. The data showed that after the merger, Land’s share price rose 5% to 51.19 pounds.

RAND CEO Mark Bristow also said that the new company’s goal will be to provide industry-leading returns, which will take a more rigorous review of the company’s asset base and how to conduct business, and do a good job. Prepare for a difficult decision.

According to publicly traded data, the combined new company will produce 6.5 million ounces of gold per year, which will further erode the US-listed competitor Newmont Mining.

The all-stock agreement price will set the price of RAND at around £49 per share, which is the closing price on Friday night. Shareholders also have the right to receive a dividend of $2. Barrick offered 6.128 shares per rand share and agreed to pay a $300 million break-up fee.

But analysts also said that the negotiations between the two companies’ heads, John Thornton and Bristol, will determine whether the deal is successful or not.

It is reported that Thornton will continue to serve as executive chairman of the expansion company, and Mr. Bristol will serve as the chief executive officer responsible for the daily operations of the mine.

However, the new company will be listed in Toronto and New York, which means London will lose its biggest gold stock.

Royal Bank of Canada Capital Markets said that due to Rand’s African exposure, Barrick shareholders may not accept the merger well and may make the new company vulnerable to Newmont’s acquisition.

It is worth noting that Barrick told the Financial Times that as part of the deal, Shandong Gold, one of China’s largest gold producers, has agreed to buy Barrick’s 300 million shares of Barrick, and Barrick will also Purchase the equivalent shares of Shandong Mining, a subsidiary of Shandong Gold.

Despite the current tight economic relations between China and the United States, there is still no significant impact on the export of Chinese titanium dioxide. From January to July 2018, the total export volume of titanium dioxide in China was 563,039.20 tons, a year-on-year increase of 21.03%.

China is the world’s largest exporter of titanium dioxide, and its current annual export volume ranks first in the world. In 2013, China’s export volume of titanium dioxide was 403,036.69 tons. In 2014, the export volume of titanium dioxide was 552,473.65 tons. In 2015, the export volume of titanium dioxide was 538,394.44 tons. In 2016, it was 720,470.09 tons, and in 2017, it was 830,915.95 tons. Except for the downturn in the international economic situation in 2015, the export volume of titanium dioxide showed a slight decline. The export volume of titanium dioxide in China has shown steady growth over the years. In 2017, the export volume increased by 427,879.36 tons compared with 2013, an increase of 106%.

In 2018, China’s titanium dioxide export volume still showed steady growth. According to customs data, by July 2018, China’s titanium dioxide exports in 2018 totaled 563,039.20 tons, an increase of 21.03%. The average export price in July was the highest in June 2018, at the highest price of 2,650 US dollars / ton.

Among the titanium dioxide exported by China in 2017, the major exporting countries are mainly developing countries such as India. On the one hand, due to the rapid economic development of these countries, the demand for titanium dioxide is large, and the domestic titanium dioxide capacity is limited. Some need to rely on imports. On the other hand, China’s titanium dioxide is mainly based on sulfuric acid titanium dioxide, which has price advantages, and China also has advantages in geography.

According to statistics, in 2018, the first exporter of China’s exporting titanium dioxide is still India. In the first three months of January to July 2018, China’s top three exporters of titanium dioxide were India, the United States, and Brazil, accounting for 9.86% of the total. 7.49%, 5.91%; of which, from January to July, it exported to India with a total of about 55,500 tons, an increase of 25% over the same period last year.

It is worth mentioning that China’s current economic relations are tense, and China’s exports of titanium dioxide to the United States have not been greatly affected. From January to July 2018, the total amount of titanium dioxide exported by China to the United States was 41,943.05 tons, compared with the same period of the previous year. Both have grown.

As the world’s largest exporter of titanium dioxide, China’s titanium dioxide export volume has a lot of room for growth in the future, while India’s developing countries as the main emerging economies, the demand for titanium dioxide has increased, and future development in India China will continue to be the main exporter of Chinese titanium dioxide.

First, the price trend

According to the price monitoring of the business community, the domestic calcium carbide market rose this week, with little increase. This week, the average price of the mainstream manufacturers of calcium carbide manufacturers rose from 3022 yuan / ton at the beginning of the week to 3048 yuan / ton at the weekend, an increase of 26 yuan / ton, an increase of 0.88%. Compared with the same period of last year, it increased by 11.27%. Overall, this week’s market price of calcium carbide has risen slightly.

Second, the trend analysis

(1) Products:

The market price of calcium carbide in the main calcium carbide production area has risen steadily this week. The mainstream ex-factory price of calcium carbide in Wuhai and Erdos districts in Inner Mongolia is 2900-3150 yuan/ton, and the price is slightly higher; the price of first-class products in Inner Mongolia Wumeng is 2850 yuan/ton, the price is temporarily stable; the mainstream ex-factory price of calcium carbide in Xinjiang is 2950 yuan/ton. Temporarily stable.

The mainstream ex-factory price of calcium carbide in Shizuishan area of Ningxia is about 2850-3160 yuan/ton, and the price is slightly higher. The mainstream ex-factory price of calcium carbide in Shaanxi area is about 3080-3200 yuan/ton, and the price is slightly higher. The mainstream ex-factory price of calcium carbide in Gansu is 3,200 yuan / ton, and the price has increased slightly. Overall, the price of calcium carbide has risen steadily this week.

2) Industry chain:

Upstream raw materials market: Coke factory prices fell this week. The quotation fell from 2,572 yuan / ton at the beginning of the week to 2,516 yuan / ton at the weekend, down 56 yuan / ton, a decrease of 2.19%, an increase of 15.96% over the same period last year. The decline in raw material prices has a negative impact on the market of calcium carbide.

Downstream market: The price of pvc ex-factory fell slightly this week. The price of pvc dropped from 6,916 yuan/ton at the beginning of the week to 6,879 yuan/ton at the weekend, a drop of 37 yuan/ton, a decrease of 0.54%, which was 899% lower than the same period of last year. The enthusiasm of downstream customers for calcium carbide procurement is not high, the demand for calcium carbide is falling, and the price of PVC has a negative impact on the market of calcium carbide.

Third, the market outlook

After the adjustment in August, the funds returned by the factories were in good condition, the equipment was overhauled, and the production capacity increased. The price of upstream raw materials fell, the cost of calcium carbide fell, and the decline in the parade caused the decline in demand for calcium carbide. The market outlook predicts that the price of calcium carbide will fluctuate and fall in mid-September, and the decline will not be large. The ex-factory price will remain at around 3,000 yuan/ton.

On September 12th, the PX Commodity Index was 84.00, which was the same as yesterday. It was 17.97% lower than the highest point of 102.40 points (2013-02-28) in the cycle, which was 84.41% higher than the lowest point of 45.55 on February 15, 2016. (Note: Period refers to 2013-02-01 to date)

Recently, the domestic p-xylene market price fluctuated at a high level. The on-site installation of Pengzhou Petrochemical was overhauled. The Urumqi petrochemical plant started 50%. The Tenglong aromatics plant has been in operation. Other devices are temporarily operating stably, and the domestic p-xylene market is normal. The operating rate of PX devices in Asia is less than 70%. On September 12, the closing price of the paraxylene market in Asia increased by USD 24/ton, and the closing price was USD 1317-1319/ton FOB Korea and USD 1337-1339/ton CFR China, USA WTI crude oil futures market price rose in October, reported 70.37 US dollars / barrel, an increase of 1.12 US dollars, Brent crude oil futures prices rose, reported 79.74 US dollars / barrel, or 0.68 US dollars, upstream raw material prices rose slightly, the recent textile industry The market trend is general, and the PX market price fluctuates. The downstream PTA market was affected by the delay in resumption of production, and the PTA supply was slightly tight or continued. By the 12th, the domestic PTA operating rate was around 78.58%, the PTA price remained high, and the average price in East China was 9300-9350. /Ton the vicinity of the self-lifting, coupled with the downstream production and sales maintained relatively high level of smooth operation, PTA is still in a balanced small de-stocking state, it is expected that the PX market price will remain high in the later period.