Analysis of Aluminum Industry Chain


Release time:

2021-11-05

The non-ferrous metals industry is at the upstream resource end of the industrial chain. Many important industries in the national economy (real estate, construction, automobiles, home appliances, power equipment, etc.) are its downstream, which makes the operation of the non-ferrous metal industry closely related to the entire national economy, showing a strong periodicity.

The non-ferrous metals industry is at the upstream resource end of the industry chain. Many important industries in the national economy (real estate, construction, automobiles, home appliances, power equipment, etc.) are its downstream, which makes the operation of the non-ferrous metal industry closely related to the entire national economy, showing a strong periodicity. Due to their special physical and chemical properties, non-ferrous metals are mined and processed into various raw materials, which are used in various production activities to eventually form end consumer goods.

Non-ferrous metals refer to all metals except iron, chromium and manganese. Among them, aluminum has a wide range of applications and strong consumption attributes. The growth rate of consumption is closely related to the macro-economy. Both the growth rate and the expansion of application scope are stronger than other basic metals.

Aluminum industry chain is the process of converting bauxite into alumina by Bayer method or sintering method, and then using alumina as raw material to produce primary aluminum by high-temperature molten salt electrolysis process.
After adding alloying elements to electrolytic aluminum, it is processed into aluminum profiles, plates, strips and foils by extrusion, rolling and other forms, which are widely used in real estate, automobiles, packaging, electricity and other fields.
Upstream of aluminum industry chain
The upstream of aluminum industry chain is "bauxite-alumina-electrolytic aluminum", which produces raw materials for aluminum processing.
Bauxite
Aluminum is the most abundant metal element in the earth's crust. According to data from the US Geological Survey, the global bauxite resource reserves are 550-75 billion tons and the basic reserves are 30 billion tons. Based on the mining of 0.37 billion tons a year, it can be mined for at least 80 years. It is a mineral with rich reserves and has little resource limitation.
The distribution of bauxite is relatively concentrated, with the top 5 reserves of Guinea, Australia, Vietnam, Brazil, and Jamaica accounting for 72% of the world's reserves.
China's basic bauxite reserves account for only 3% of the world's total, but its annual bauxite production accounts for 20% of the world's total. From the perspective of regional distribution, bauxite in China is mainly distributed in Guangxi and Guizhou in the southwest, and Henan and Shanxi in the middle.
According to Aladdin, an aluminum industry consulting agency, if calculated according to the annual consumption of 0.1 billion tons of domestic bauxite, the mine recovery rate of 90%, and the dilution rate of 10%, the static guarantee life of China's bauxite is only 8 years.
Alumina: China is the world's largest alumina producer
According to the International Aluminum Association, global alumina production totaled 0.134 billion tons in 2020 and 0.132 billion tons in 2019, an increase of 1.41 percent year-on-year.

With its domestic bauxite resources and overseas ore imports, China has become the world's largest alumina producer. China's global share of alumina production has increased from 13% in 2005 to 54% in 2019, and alumina production has increased from about 8.5 million tons in 2005 to 70.353 million tons in 2020.

Alumina accounts for 40% of each cost item, 40% of bauxite, 17% of caustic soda and 19% of energy, accounting for 76% of the total.

Bauxite accounts for the largest proportion and is the cost item with the largest difference between plants, and the cost of bauxite procurement determines the cost of alumina plants.

Electrolytic Aluminum

Alumina, electricity and carbon anode account for 81% of the production cost of electrolytic aluminum and are the source of cost differences among electrolytic aluminum enterprises.

Electrolytic aluminum electricity can be divided into grid power and self-contained electricity, aluminum plants to obtain low electricity prices, either look for low grid power prices in areas of low coal prices, or build enterprise self-contained power plants. Therefore, the general direction of the migration of domestic electrolytic aluminum production capacity is to find electricity price depressions.