The following analysis of the supply of electrolytic aluminum in the second half of the year

We think there are three main points to consider:

First, increase the capacity release. By the end of May, this year's new capacity was put into production totaling 1.445 million tons, but of these, 775,000 tons were placed under high profit last year, and the production capacity has only been 670,000 tons since the beginning of this year. From June to December this year, the production capacity to be put into operation was 2.805 million tons. An optimistic assumption was made, the operating rate was 80% and all were put into production as scheduled, and the output in the second half increased by 660,000 tons.

Second, the production capacity for resumption of production in the 17-year heating season. As of the end of May, the 1.01 million tons of production capacity that was stopped during the heating season last year has been restored to 642,000 tons, and the production capacity is about 368,000 tons. The production capacity that has not yet resumed is due to cost and other reasons, considering whether the heating season will be discontinued this year. Undetermined, combined with the current aluminum price, we expect that the probability of starting within the year is not large.

Third, the 18-year heating season production policy. This year, the Central Environmental Supervision Team clearly stated that it is steadily prohibiting environmental protection from being "one size fits all". This attitude has been responded to in the local documents: In May, Henan issued the "Notice on Soliciting Suggestions and Suggestions for the Four Major Operational Plans for the Prevention and Control of Air Pollution in 2018." Similar to last year, the "Notice" requires winter heating season, the province's electrolytic aluminum, alumina enterprises to achieve a limited production of more than 30%. For electrolytic aluminum enterprises that have reached the special emission limit before the end of October 2018, the ratio of exempting their peak-to-peak production is reduced to 10%. During the investigation in Shandong, we learned that the local major electrolytic aluminum companies are responsible for the fact that this year's heating season will continue. Assuming a limited production of 10% in Henan, Shandong and Shanxi refer to last year's limited production capacity. This year's heating season has a production capacity of 900,000 tons. Considering that there are still 368,000 tons still not resuming, the heating season is actually going to be closed. The production capacity of suspended production is expected to be 532,000 tons, and the output of primary aluminum in the second half of 18 years will be reduced by about 90,000 tons.

In summary, considering the release of new capacity, 17-year heating season resumption of production and 18-year heating season shutdown, it is expected that electrolytic aluminum production will increase by 570,000 tons in the first half of this year. We cut our domestic electrolytic aluminum production growth forecast to 2.0% for the year, which is lower than the forecast of 3.0% at the beginning of the year.