The electrolytic aluminum listed company's overall performance growth is expected to become the impetus for yesterday's aluminum sector upside down.
The third quarter results of Jiaozuo Wanfang and Yunlv Aluminum have shown that the two companies achieved net profits of RMB 195 million and RMB 139 million, respectively. S-LAN and Baotou Aluminum are also expected to increase their performance by more than 130% and over 150%.
After undergoing industry consolidation in the past two years, alumina prices have continued to decline since the first quarter of this year, eventually triggering an overall shock in the aluminum industry chain. Industry insiders pointed out that the increase in the price difference between electrolytic aluminum and alumina and the increase in output have already promoted electrolytic aluminum companies to enter the harvest time.
Three years better profit level
At present, the alumina domestic spot price has dropped to 2,950 yuan per ton, which is a drop of 55% compared with the historical high in March.
The loss of Jiaozuo Wanfang’s performance is obviously directly related to this. The CICC report pointed out that in the third quarter of this year, Jiaozuo Wanfang produced a total of 62,100 tons of electrolytic aluminum, an increase of 18% over the same period of last year, while the sales price was approximately 19,600 yuan/ton (including tax), an increase of 16% over the same period of last year, while its main raw material alumina The purchasing price dropped by about 1% year-on-year. While the spread widened, the new production in the future will bring about the company's profit growth in 2006 and 2007.
Guohai Securities Zhu Shengqiu expects that the short-to-medium-term electrolytic aluminum prices will continue to be relatively stable, and the space between the electrolytic aluminum and alumina spreads will help the electrolytic aluminum companies to increase profits quickly. He calculated the current domestic alumina price at 2,950 yuan (including tax) per ton, calculated as 2 tons of alumina per ton of electrolytic aluminum, and the cost of alumina was 5043 yuan, which is calculated by subtracting the cost of electricity and the labor cost of other materials. Electrolytic aluminum is currently entitled to a profit of 6687 yuan in its main business. "This can be said to be a better level for electrolytic aluminum companies in the past three years."
Capacity utilization will be high
The rapid fall in alumina prices is not "accidental." Statistics show that due to the rapid expansion of production capacity in China and other countries, there is a surplus of alumina in the world in 2006, and there will be a serious excess of alumina in 2007-2008.
The relationship between supply and demand has improved, and the output of electrolytic aluminum has also grown at an alarming rate. The CICC report pointed out that with the sharp drop in alumina prices, the electrolytic aluminum industry has significantly recovered, and corporate profits have improved significantly. The annual domestic electrolytic aluminum production is expected to reach 9.2 million tons, a year-on-year increase of 17.9%, and the new production capacity will take about 1 year. Only when it is put into production, the impact of newly-built production capacity on the supply of electrolytic aluminum will be reflected later in the second half of 2007. Affected by macro-control, the total capacity of electrolytic aluminum will not repeat the situation of significant growth in previous years.
Industry analyst Heng Kun expects that the growth rate of China's electrolytic aluminum production capacity will slow down in the next three years. Before 2008, the annual new production capacity will not exceed 1 million tons. The utilization rate of the industry is expected to gradually increase, and it is expected that The capacity utilization rate will reach 84.7% in 2007 and will rise further to 88.6% by 2008, which will also be a relatively high level since 2000.
Industry integration companies benefit
At present, Shanghai and Shenzhen aluminum listed companies include S Shandong Aluminum, Jiaozuo Wanfang, Zhongfu Industry, S Lan Aluminum, Guanlv Aluminum, and Yunlv Aluminum. According to statistics, most of them have extended the industrial chain to bauxite, alumina, electrolytic aluminum and aluminum processing, and the improvement of the industrial chain will effectively reduce the company's earnings fluctuations.
Jiaozuo Wanfang, Baotou Aluminum and S Lan Aluminum have recently signed a long-term alumina supply contract with Chinalco, which will lock all alumina supply in the next three years into long-term contracts. Zhu Shengqi estimated that next year, domestic aluminum prices will be 18,500 yuan, spot alumina average price is 2,850 yuan / ton, according to 17% of the price and 18,500 yuan / ton of aluminum prices, in 2007 the long price of alumina is 3145 per ton Yuan will have a high price of 295 yuan.
Does this mean that these electrolytic aluminum companies are also unable to benefit from the drop in spot purchase cost?
Heng Kun said that these companies are likely to gradually reduce the number of alumina long-term orders in the future, the corresponding increase in the proportion of off-the-shelf, so as to better share the benefits of cost reduction, such as Yunalu shares this year long-term alumina single- The proportion is 50% and will fall below 40% next year. He also proposed to pay attention to several types of high-quality companies, such as companies with significant expansion of production capacity in the next two years, companies with low or long alumina bills ratios, companies with better cost control, and high proportion of aluminum processing products. The company, Yun Aluminum, Nanshan Industrial, S Lan Aluminum and Baotou Aluminum are among them, while the alumina-based company alone will be in a difficult situation in the next two years, and Chinalco is expected to become an industry consolidation again. The initiator.
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