The high concentration of electrolytic aluminum industry has not been transformed into bargaining power.
The CR5 of China's electrolytic aluminum (primary aluminum) industry has reached 52% (27% of steel), but in the past 10 years, this has not made aluminum prices and benefits outperform iron and steel. The main reasons are: (1) both aluminum and steel smelting have the characteristics of high restart costs, which makes it difficult for electrolytic aluminum to cooperate to reduce production; (2) the unit price of electrolytic aluminum is 3-4 times that of steel, which expands the transportation radius and hedges the effectiveness of monopoly to some extent;
(3) the proportion of recycled aluminum in total aluminum output is 17% (steel is about 10%), and the substitution effect on primary aluminum is more obvious.
The peak consumption of electrolytic aluminum industry is coming.
(1) from the perspective of comparison between China and the United States, the per capita consumption of total aluminum in China is 27.9 kg in 2019, which is still 30% room for the peak level of the United States. It is estimated that around 2027, the per capita consumption and accumulation of aluminum in China are expected to reach the level of the peak of consumption in the United States.
(2) from the perspective of domestic downstream aluminum demand, 2019 has seen the first negative growth in nearly 30 years, the main downstream industries have shown a trend of weak growth, and the substantial growth of the total amount in the future is difficult to sustain. it is still worth looking forward to replacing other materials in some downstream areas.
Waste aluminum will become an important growth pole of aluminum supply.
Based on the 18-year life cycle of aluminum products, we expect that the proportion of depreciation scrap aluminum in total aluminum consumption in China will accelerate around 2020: 6.06 per cent in 2014, 8.07 per cent in 2019, 14.75 per cent in 2024 and 27.45 per cent in 2029.
This means that even if primary aluminum production is stable, the increase in scrap aluminum supply will drive a significant increase in total aluminum supply, which is similar to steel.
Lightweight and new energy vehicles will be an important bright spot in the future development of aluminum.
The density of aluminum is the same as that of steel. Among many lightweight materials, aluminum has strong competitiveness in mass production technology difficulty, production cycle, material cost and so on. Under the general trend of lightweight, the automobile industry, as the second largest downstream consumption field of aluminum, will promote the aluminum industry to deduce new bright spots.
According to the forecast of the International Aluminum Association in September 2019, the aluminum consumption of Chinese cars per bike will increase by 78% in 2030 compared with 2018, of which the aluminum consumption of new energy vehicles will increase nearly 20 times and contribute 7.2% of the national aluminum consumption.
The traditional aluminum industry will be "steelized" in A-shares, while the new aluminum will give birth to the splendor of "light".
(1) the traditional aluminum industry and iron and steel are faced with common constraints: limited space for total demand growth, still expanding supply, low concentration of processing materials (CR5 of steel and aluminum are both about 20%), high restart costs leading to coordinated production reduction, high ore dependence, and it will take time for India to rise, so the traditional aluminum plate may gradually become "steelized".
(2) the emerging aluminum will benefit from its "light" and other characteristics, and will deduce new splendor under the guidance of the high-speed expansion of the emerging fields downstream.
Investment suggestion: the elasticity of traditional aluminum plate and the heavy structure of new aluminum material.
Comprehensive valuation and industry development prospects, we maintain the overall "overweight" rating of the aluminum plate, in which for the traditional aluminum smelting plate, it is more important to judge the trend of aluminum prices. the market capitalization of relevant listed companies with high sensitivity to aluminum prices are: China Hongqiao (01378), Yunnan Aluminum shares;
The emerging aluminum plate needs to pay more attention to the downstream composition. At present, new energy vehicles account for a certain proportion of the sales income of Chang Aluminum shares, Yinbang shares, Asia-Pacific Technology and so on.
