I. The supply of bauxite continues to be strained and prices rise

May 16, Aladdin Alumina spot quote 3050 yuan/ton, this week’s increase has reached 8.5%, basically showing a leap upward, and this price compared to April 15 at the bottom of the quote 2665 Yuan/ton has also risen 14.5%. The price of domestic alumina continued to be in the downlink from a staged high of 3340 yuan/ton in mid-September last year, and alumina prices began to rebound after bottoming out in mid-April this year.

The logic of the rebound is mainly due to the continued tension in the supply of bauxite in Shanxi, Shanxi region’s alumina production capacity accounts for about 30% of the total domestic production capacity, and the cost of producing alumina in the entire cost curve at the right end of the position, so pushed up the price of alumina at the beginning of the rebound. And the recent leap upward of alumina prices is due to the impact of the leakage of the red mud Bank in Shanxi. May 7 Jiaokou County The government set up a joint verification working group to carry out a verification work on “leakage of red mud reservoir in Shanxi Junction Shin aluminium factory”. Shanxi junction Fat Aluminum Co., Ltd. is a subordinate enterprise of Shandong Jiaokou County Aluminum Power Group, is also a large private enterprise to attract investment, according to media reports, the alumina project of the Red Mud Reservoir dam surface has cracks, lye leakage and seriously pollute the environment, while triggering the possibility of dam break worries. The official briefing indicated that a shutdown directive had been issued for the enterprise, that 2.8 million tons of alumina production capacity of the enterprise was being rectified as required, that the recovery time had not been determined, and that subsequent market developments remained to be observed.

Aladdin data show that as of March, the total production capacity of domestic alumina is 83.97 million tons, in the yield of 69.61 million tons, Shanxi Junction alumina project shutdown capacity accounted for 3.3% of the total production capacity, accounting for 4% of production capacity. In addition, due to the impact of environmental protection issues, the Office of the central Ministry of Ecological Environment in the near future expedited triggered the “2019 years of ecological Environmental protection overall supervision (first round) notice”, the Central Ecological Environment Department will draw 23 people from May 15 to 25th in Shanxi to carry out integrated strengthening supervision (phase I) work,

Follow up on the inspection and influence of aluminum oxide plant in Shanxi area should be paid close attention to.

Second, the world’s largest alumina plant or comprehensive production SMM5 16th, the Norwegian company (NorskHydro) said in a statement on the official website that the Brazilian Federal court in Belém, Brazil, on the May 15 of the local time to lift the production ban on the Alunorte aluminium oxide plant under the Norwegian Sea, the resolution in the civil action against this incident came into force. Hydro hopes the court can make the same decision on parallel criminal proceedings against the case as soon as possible.

Until then, the Alunorte aluminium oxide plant will continue to maintain 50% operating capacity. The Brazilian Alunorte aluminium oxide plant is the world’s largest alumina plant, with an annual output of 6.3 million tons, accounting for about 5% of the world’s 130 million tonnes of alumina production. The plant in early March 2018 due to pollution accidents affected the shutdown of 50% production capacity, after a brief comprehensive shutdown in October and continued to produce 50% of production capacity. Now the proceedings in hydro and the local courts have finally paid off, and it remains to be seen when production can be fully resumed.

If the Alunorte aluminium oxide plant is fully produced, which is a relatively large bearish factor for overseas alumina prices, overseas alumina prices will continue to be under pressure.

Iii. Investment Proposals It is expected that domestic alumina prices will continue to rise in the short term, alumina profit repair, as well as domestic electrolytic aluminum price center will steadily rise, electrolytic aluminum profits continue to repair, increase industry rating to “stronger than the big city”