Demand for aluminum in the second quarter will cause aluminum prices to rise
Demand for aluminum in the second quarter will cause aluminum prices to rise
On the demand side, aluminum for real estate will be the backbone of aluminum ingots, and aluminum for power grids is expected to become the highlight of aluminum consumption in the second quarter. Although the weak production and sales of automobiles have dragged down demand for aluminum, aluminum exports will become a marginal improvement variable for aluminum demand. Overall, we believe that the inventory of aluminum ingots in the second quarter is worth looking forward to.
First of all, in terms of real estate, from the perspective of the construction area of new housing and the area of new housing completion, the cumulative growth rate of new construction area since June 2018 is more than 10%, and it is maintained at above 15% in September-December. Operating rate. Although from the perspective of the new housing construction area, the cumulative growth rate of the completed area has been below -10% since June 2018. However, the area of the new construction started in the previous period is currently in the market with sufficient funds, and the completion is expected to increase. In the second quarter, there was a recovery in the area of completion, which in turn drove the demand for aluminum for real estate. Therefore, we believe that real estate is the main force of the aluminum ingots in the second quarter.
Secondly, the power grid, which accounts for 12% of the electricity demand in the aluminum consumer sector, is mainly concentrated in aluminum cables, most of which are on steel-cored aluminum strands in UHV construction. In the second half of 2018, the growth rate of power grid investment was obvious. The State Grid completed a new round of bidding, and the growth rate of power grid investment has rebounded significantly. Moreover, in recent years, grid investment has mainly concentrated in the UHV field, which directly supports the consumption of aluminum cables. On September 7, 2018, the National Energy Administration approved five UHV DC lines and seven UHV AC line construction projects. SMM estimated that according to the bidding amount of historical projects, if the planned 9 lines are completed, it will be pulled. Approximately 680,000 tons of aluminum is used, which will provide an increase in aluminum consumption. In the second quarter, after March, the aluminum cable will be intensively handed over, which will greatly boost the demand for aluminum. The aluminum used in the grid will become the highlight of aluminum demand in the second quarter.
Finally, in terms of aluminum exports, China's aluminum export data in 2018 is relatively good. The total amount of unwrought aluminum and aluminum exports for the year totaled 5.802 million tons, an increase of 20.87% compared with 2017. In January 2019, aluminum exports were 550,000 tons, a record high in five years. Due to the Spring Festival factor, aluminum exports in February fell sharply by 38% to 340,000 tons compared to January. In March, aluminum exports were 546,000 tons, and exports returned to high growth. Aluminum exports will be the marginal variable of aluminum demand in the second quarter.
On the whole, the aluminum price will fluctuate in the second quarter, with limited pressure on the supply side and demand to push the aluminum ingots to stock.