Bearish factors are basically cleared and the alumina market is worth looking forward to

At the end of April, the mainstream quotation of the domestic alumina market was 2300~2340 yuan / ton in Henan, 2300~2330 yuan / ton in Shanxi, 2300~2340 yuan / ton in Shandong, and 2270 yuan / ton
in Guangxi.
Affected by psychological expectations and habitual thinking, the current alumina market is still shrouded in a bearish atmosphere, but from the perspective of cost changes, market supply and demand, resource support and policy expectations, the market does not have room to fall, alumina prices will gradually stabilize and rise in dynamic adjustment, and the future market can still be expected
.

The supporting role of cost on the market is gradually strengthening
.
The main cost components of alumina include bauxite, coal and caustic soda, accounting for 60%~80%
of the total cost.
Since the beginning of this year, stimulated by tight supply and coal supply measurement reform, the price of caustic soda has risen by 10%, but it has doubled compared with last year's low, bauxite prices have risen by 22%, coal prices have continued to run at a high level, and the rapid rise in the cost of major raw materials has led to a sharp increase
in the cost of alumina.
At present, the complete cost of alumina produced by imported mines is about 2450~2550 yuan / ton, the complete cost of alumina produced by domestic mines in Henan is about 2550 yuan / ton, and the complete cost of alumina produced by domestic mines is about 2430~2520 yuan / ton
.
After two months of retreat, alumina prices have hit the break-even point of most companies, and some companies have begun to lose money
.
At the same time, because the impact of caustic soda and limestone in this round of environmental protection rectification is still rising, the cost of caustic soda to the plant of some enterprises has exceeded 4,000 yuan / ton, the trend of rising prices is still continuing, the loss surface of alumina enterprises is expanding, and some enterprises will once again raise the agenda of flexible production
.
From the trend point of view, the operating capacity of alumina has entered an inflection point
.

The market is still in
basic equilibrium.
It is understood that in the first quarter of 2017, China's electrolytic aluminum production is about 9.
2 million tons, alumina production is about 17.
1 million tons, imported alumina 920,000 tons, only from static analysis, the market oversupply is about 300,000 tons, if you consider the demand for about 600,000 tons per quarter of the non-metallurgical market, the domestic market is essentially still in a tight balance or a slight shortage
.
From the perspective of the impact of imported alumina on China, the import volume in the first quarter fell by 26% year-on-year, mainly because the supply and demand of foreign markets were basically balanced, and there was not much margin to enter China
.
In the second quarter, despite the reduction in the production of Bahrain Aluminum and Vedanta electrolytic aluminum, the impact on the Chinese market was still very limited
due to the small scale of electrolytic aluminum production capacity and the small demand for alumina.
In the second quarter, because the operating capacity of electrolytic aluminum is still at a high level, the supply of alumina is reduced due to environmental protection, bauxite and cost factors, and the balance between supply and demand of alumina may turn into a tight state again
.
From the perspective of inventory changes in electrolytic aluminum enterprises, due to the limited purchase for two consecutive months, the inventory of most enterprises is also at a low level
.
Once replenishment occurs, it will accelerate the formation
of market inflection points.

The impact of environmental protection on the industry is gradually increasing
.
2017 will be the most severe year for environmental protection inspectors and environmental governance in China, and the state will start from many aspects such as comprehensively promoting clean heating in winter, off-peak production during the heating period of industrial enterprises, and strengthening the response to heavily polluted weather
.
After the inspection of air environment quality in the first quarter, environmental protection
inspections in 15 provinces will be launched in the second quarter.
At the end of April, seven central environmental protection inspection teams have gone to seven provinces (cities) including Tianjin, Shanxi, Liaoning, Anhui, Fujian, Hunan, and Guizhou to carry out a one-month environmental protection inspection work.
It will also focus on understanding the implementation of local governments' implementation of environmental protection party and government responsibilities and dual responsibilities for one post, and strict accountability, and supervise local party committees, governments and their relevant departments for environmental protection inaction and indiscriminate behavior
.
According to the country's high-pressure situation on environmental protection issues, similar environmental inspections are expected to be carried out
every quarter.

Due to the low proportion of boiler and coal-to-gas system emissions in the production process of some alumina enterprises, the safety hazards of red mud storage are large, and the surrounding people have strong repercussions, and the inspection team has been listed as the focus of
inspection.
It is understood that after the inspection team stationed in Shanxi, some production lines of many alumina enterprises have been shut down, involving a production capacity of nearly 2 million tons, which is expected to affect the output of 100,000~150,000 tons / month
.
From the impact of atmospheric environment treatment on the aluminum industry this year, after the alumina production capacity and electrolytic aluminum production capacity are limited by 30% at the same time, alumina may affect 31 million tons of production capacity, electrolytic aluminum may have 12 million tons of production capacity, according to the single consumption of 1.
92 tons, equivalent to alumina production capacity to turn off about
8 million tons.
Therefore, after the arrival of the heating season, if the work plan for atmospheric treatment is effectively implemented, there will be a large gap
in the supply of alumina.

The bottleneck problem of bauxite resources will become increasingly prominent
.
At present, in China's alumina industry structure, the capacity of domestic mine production is about 50 million tons
.
In Henan, Shanxi and other areas with rapid growth in alumina production capacity, with the acceleration of bauxite consumption and the decline of resource security capacity, competition between enterprises in the process of competing for limited resources, especially high-quality resources, is intensifying, and bauxite prices are also rising
.
At the same time, due to the serious indiscriminate mining and digging, the phenomenon of mining wealth and abandoning poverty is prominent, which aggravates the dilution of resources, weakens the service life of resources, and also causes the consumption of liquid alkali and other materials to rise significantly, and the cost pressure continues to increase
.
It is understood that the purchase price of ore with an Al/SI of 6 in Xiaoyi area of Shanxi has reached 355 yuan / ton, and the purchase price of ore with an Al/SI of 5.
5 in the Sanmenxia area of Henan has also reached 330 yuan / ton, and ore and caustic soda have accounted for more than
55% of the cost of alumina.
As the inspection team enters Shanxi and Guizhou, civilian mining will become difficult, the crushing process of ore will be strictly inspected, and the ore supply capacity will be significantly reduced
.
In the long run, due to the disorderly development of alumina and the acceleration of resource dilution, the supply of bauxite in Shanxi and Henan will become more and more difficult, and the current level of annual consumption of 400 million ~ 50 million tons in Shanxi, the existing reserves can not meet the development of 10 years
.
The issue of sustainable development has attracted great attention
from local governments and industry associations.

Comprehensive analysis, after the alumina market has experienced a round of large fluctuations, the bottom of the market has appeared, and the bearish factors have basically cleared
.
With the impact of environmental protection inspectors on operating capacity and the gradual withdrawal of some high-cost production capacity, the supporting role of supply and demand and cost has gradually strengthened, and the market is undergoing positive changes
.
It is expected that the alumina market will stop falling and rise in May, and once the market reversal trend is established, the price may still continue to rise, and the future market of alumina is worth looking forward to
.