2017 credit risk review and analysis of the hottes

2022-07-25
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Electrolytic aluminum industry: 2017 credit risk review and 2018 outlook

in the first three quarters of 2017, thanks to the supply side reform, China's electrolytic aluminum supply contracted and the capacity utilization rate picked up. It is expected that in 2018, with the continuous promotion of measures such as illegal capacity clearance and environmental protection and production restriction, the supply of electrolytic aluminum will be in short supply and the capacity utilization rate is expected to be further improved

driven by the steady growth of downstream demand, China's apparent consumption of electrolytic aluminum in the first three quarters of 2017 achieved rapid growth year-on-year, and the tight balance between supply and demand supported the upward fluctuation of aluminum price; It is expected that in 2018, the demand for electrolytic aluminum will grow steadily, the growth rate will decline, and the aluminum price will maintain a high level

benefiting from the rising price of electrolytic aluminum, in the first three quarters of 2017, the income and profit of major bond issuing enterprises increased rapidly, and the growth rate decreased; It is expected that the revenue and profit of major bond issuing enterprises will increase steadily in 2018, and the gross profit margin will be the same as that in 2017

in the first three quarters of 2017, the operating net cash flow of major bond issuing enterprises increased rapidly compared with the same period of last year; It is expected that in 2018, the operating net cash flow of large aluminum enterprises with production capacity and captive power compliance will continue to improve

in the first three quarters of 2017, the asset liability ratio of major bond issuing enterprises decreased. It is expected that in 2018, aluminum enterprises will focus on technological transformation, expand production capacity more cautiously, accelerate industry mergers and acquisitions, reduce the debt burden, and improve the overall solvency of the industry

Dongfang Jincheng believes that in 2018, most of the electrolytic aluminum enterprises' profits and cash flow maintained an improvement trend, the asset liability ratio decreased, and the industry risk outlook was stable

situation of electrolytic aluminum industry

in the first three quarters of 2017, China's electrolytic aluminum supply and demand relationship improved and capacity utilization picked up thanks to supply side reform; It is expected that in 2018, with the clean-up of illegal production capacity and the continuous promotion of environmental protection measures to limit production, there will be a gap at the supply side of electrolytic aluminum, and the capacity utilization rate is expected to further improve. From 2012 to 2015, with the slowdown of macroeconomic growth, the growth rate of downstream demand for electrolytic aluminum will decline, and the capacity utilization rate will continue to decline, from 89.84% in 2012 to 78.17% in 2015. In 2015, the total capacity of the electrolytic aluminum industry reached 38.645 million tons, and the capacity utilization ratio decreased by 11.67 percentage points compared with 2012. Since 2016, with the stabilization and recovery of the macro economy, the downstream demand of the aluminum industry has resumed growth, the supply-demand relationship of electrolytic aluminum has improved, and the capacity utilization rate has begun to rise. In 2016, China's electrolytic aluminum output was 31.4131 million tons, a year-on-year increase of 28.84%, and the capacity utilization rate rose to 83.07%

in the first three quarters of 2017, the cumulative output of electrolytic aluminum was 24.66 million tons, the cumulative year-on-year growth rate continued to decline, the capacity utilization rate increased to 83.83%, and the contradiction between supply and demand in the industry was alleviated

in the first three quarters of 2017, the state successively issued a series of policies (see Annex I for details) to accelerate the supply side reform of the electrolytic aluminum industry and resolve the excess capacity of the electrolytic aluminum industry. From January to September 2017, the electrolytic aluminum industry cleaned up a total of 5.58 million tons of illegal production capacity, accounting for 15.39% of the total production capacity. The conversion affected the production of 4.6777 million tons. The clean-up capacity far exceeded the total capacity of the past six years, and the implementation of policies exceeded market expectations. Enterprises greatly affected by the illegal capacity clearance policy include Shandong Hongqiao/Weiqiao group, Xinfa group, Dongfang hope, Qiya aluminum, Jinlian aluminum, Zouping aluminum, etc. The capacity utilization rate of electrolytic aluminum industry continued to rise. In the third quarter of 2017, the capacity utilization rate of electrolytic aluminum increased to 83.83%. Dongfang Jincheng believes that in 2018, with the clean-up of illegal production capacity and the continuous promotion of environmental protection measures to limit production, there will be a gap between the supply and demand of electrolytic aluminum, and the capacity utilization rate is expected to be further improved

in the first three quarters of 2017, driven by the growth of downstream demand, China's apparent consumption of electrolytic aluminum continued to grow year-on-year, and the growth rate in the third quarter decreased month on month. It is expected that the growth rate of electrolytic aluminum demand will decline slightly in 2018 due to the slowdown of downstream industry growth and other factors

according to the statistics of China Nonferrous Metals Association, the downstream demand for electrolytic aluminum is mainly real estate construction, transportation, power electronics and durable consumer goods, accounting for 39%, 17%, 16% and 14% respectively. The real estate construction industry is an important area of aluminum consumption, and building profiles account for more than one third of the total aluminum consumption

the demand of the downstream real estate, automobile and household refrigerator industries of electrolytic aluminum increased steadily, while the growth rate of the power generation equipment, automobile and electric infrastructure industries decreased. In the first three quarters of 2017, the completed investment in real estate development increased by 8.10% year-on-year, and the growth rate increased by 2.3 percentage points year-on-year; The cumulative automobile output increased by 4.90% year-on-year, and the growth rate decreased by 7.40 percentage points year-on-year; The output of household refrigerators increased by 13.30% year-on-year, and the growth rate increased by 12.5 percentage points year-on-year; The cumulative output of power generation equipment decreased by 4.70% year-on-year, and the growth rate decreased by 6.2 percentage points year-on-year; The completed investment in power infrastructure increased by 4.63% year-on-year, and the growth rate decreased by 26.94 percentage points year-on-year. Supported by the steady growth of downstream demand, China's apparent consumption of electrolytic aluminum in the first three quarters of 2017 was 27.926 million tons, a year-on-year increase of 18.42% and a year-on-year increase of 18.06 percentage points; The quarter on quarter growth rate decreased in the third quarter

in the future, as the real estate regulation enters the "five restrictions era" of "purchase, loan, price, sales and business", the growth rate of the real estate and construction industry will fall back. Affected by the increase of passenger car purchase tax in 2018 and the early release of demand, the growth rate of car sales will also decline. From the perspective of power investment trend, China's power saturation is less than that of the power supply, and it is still necessary to continue to invest in power in terms of renewable energy consumption capacity and power supply reliability. In the future, the focus of power construction investment will shift from the trunk to the distribution side. With the tightening of the real estate market, the upgrading of energy efficiency standards and the rising cost of raw materials, the output growth of household refrigerators will decline. In general, the growth rate of downstream demand will slow down in 2018, and the growth rate of electrolytic aluminum demand will be stable and slightly lower

under the combined effect of the unexpected reduction of electrolytic aluminum production capacity and the growth of downstream consumption, the price of electrolytic aluminum rose in the first three quarters of 2017; In 2018, the growth rate of electrolytic aluminum demand decreased slightly, the supply contraction was large, the inventory pressure was relieved, and the cost support was strong. It is expected that the average price of electrolytic aluminum will maintain a high level

affected by downstream demand, the growth of electrolytic aluminum apparent consumption and other factors, the domestic aluminum price remained in the range of 13000 yuan/ton to 14000 yuan/ton in the first half of 2017, and the aluminum price rose rapidly in the third quarter, The average price of electrolytic aluminum in the first three quarters was higher than that in the same period of 2016. Among them, the price of A00 aluminum in Yangtze nonferrous metals market increased by 26.37% to 16150 yuan/ton from 12780 yuan/ton at the beginning of the year, and the price of aluminum in LME3 months increased by 25.99% to 2133 dollars/ton from 1693 dollars/ton at the beginning of the year

in March 2017, the Ministry of industry and information technology and the Ministry of Environmental Protection released the 2017 work plan for air pollution prevention and control in Beijing, Tianjin, Hebei and surrounding areas, and issued the policy of limiting production in winter heating season for some highly polluting industries in Beijing, Tianjin, Hebei and surrounding areas (1). In the heating season of 2017, 11.96 million tons of capacity of electrolytic aluminum plants in Beijing, Tianjin, Hebei and surrounding areas will be affected, and the output of electrolytic aluminum will be reduced by more than 1 million tons (see Annex II for details). Due to the fact that the production capacity involved in the peak staggering production scheme in the heating season coincides with the illegal production capacity announced in July 2017, Weiqiao group does not need to shut down the electrolytic aluminum production capacity in the heating season, and the environmental protection and production restriction in the heating season will not have an adverse impact on Shandong Hongqiao/Weiqiao group

in the first three quarters of 2017, the inventory of electrolytic aluminum (2) was 1.458 million tons, reaching a historical high. With the continuous implementation of staggered peak production in heating season, the decline of operating capacity has led to the tightening of the supply side; Aluminum price callback, downstream demand for bargain hunting; With the coming of winter, the transportation capacity of Xinjiang, the core production area of electrolytic aluminum, is slightly insufficient (giving priority to coal transportation), the outward transportation of aluminum ingots is not smooth, and the warehousing is reduced. Since late October 2017, when there was no energy consumption, the downward inflection point of electrolytic aluminum inventory has gradually emerged. According to the statistical data of SMM (Shanghai Nonferrous Metals), on November 23, 2017, the total inventory of domestic electrolytic aluminum and aluminum rods was 1.894 million tons, a decrease of 27500 tons compared with November 20, the largest month on month decrease since October 30. "De capacity, de output and de inventory" will be further conducted, and inventory is expected to be gradually removed

2018, with the production reduction effect appearing, the inventory pressure eased, and the electrolytic aluminum supply was tight; Illegal capacity clearance, environmental protection production restriction and replenishment demand will lead to a small supply gap of electrolytic aluminum

although the growth rate of downstream demand for electrolytic aluminum has dropped, the supply of electrolytic aluminum has shrunk due to factors such as illegal capacity clearance and environmental protection and production restriction. In addition, the supply of overseas electrolytic aluminum is tight, and the performance of traditional materials is difficult to provide domestic supply increment through import. It is expected that the average price of electrolytic aluminum will remain at a high level in 2018

in the first three quarters of 2017, affected by the rising price of alumina, the main raw material, the cost of electrolytic aluminum industry increased, but the average cost price increase was lower than that of electrolytic aluminum; It is estimated that the average price increase of the overall cost of the electrolytic aluminum industry in 2018 will be lower than the increase of aluminum price.

the production costs of electrolytic aluminum mainly include aluminum oxide, electricity and prebaked anode carbon, accounting for 37%, 36% and 10% respectively. As thermal power generation is the most important power supply mode for electrolytic aluminum enterprises, coal price has become one of the important factors affecting the power cost of electrolytic aluminum enterprises. It is expected that the coal price will remain within a reasonable range in 2018, and the power cost will tend to be stable. In the first three quarters of 2017, China's alumina output was 54.861 million tons, a year-on-year increase of 24.42%, and the capacity utilization rate was 89.76%, a year-on-year increase of 4.85%. In order to implement the action plan for comprehensive control of air pollution in Beijing, Tianjin, Hebei and surrounding areas in autumn and winter 2017-2018, both Henan and Shandong have introduced the limited production time and the number of production lines for alumina. Among them, 11 alumina enterprises in Henan Province are all limited to more than 30%, and the four months of heating season will affect the alumina production capacity of 1179500 tons; Chinalco Shandong, located in Zibo, Shandong Province, will reduce production by 30% according to the production line, and its production capacity will account for 17.5% of the total production capacity. Jinzhong, Shanxi Province, which is not a "2+26" city, has also issued a plan to limit alumina production by 30% under heavy pollution weather conditions or early warning in the heating season. Affected by the environmental protection and production restriction in autumn and winter, in the third quarter of 2017, the price of alumina increased by 36.47% to 3630 yuan/ton. In the first three quarters, the price of alumina increased by 22.02%, and the average cost price increase was slightly lower than that of electrolytic aluminum

in the first three quarters of 2017, affected by environmental protection and production restriction, the operating rate and output of prebaked anode carbon showed a downward trend. The shortage of supply led to the price of prebaked anode carbon rising 64.43% to 4415.00 yuan/ton compared with the beginning of the year. The operating capacity of prebaked anode carbon in "2+26" cities is 10.16 million tons, accounting for 43.96% of the total national capacity. The output affected by the production restriction in winter heating season is about 2338100 tons. With the introduction of environmental protection production restriction policy in heating season in Shandong, Henan and other provinces and cities, the main production areas of prebaked anode carbon, the standard of 50% production restriction in some urban areas has been raised to full production restriction. The tight supply pattern of prebaked anode carbon will continue, and the price will remain at a high level

in the first three quarters of 2017, the national raw coal output reached 2.592 billion tons, a year-on-year increase of 5.7%; Coal consumption was 2.75 billion tons, a slight increase over the same period of last year. The coal industry as a whole is in a state of low inventory, and the average price of coal remains relatively high. The problem of excess capacity of coal in China still exists. In order to prevent the coal price from rising too fast and ensure the smooth implementation of the capacity reduction policy, the state has issued policies to stabilize the coal price for many times since September 2016. In the medium and long term, when the supply structure of the coal market is tight in the short term, the state will stabilize the coal supply and curb the coal price through appropriate fine-tuning policies

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