1. There was a gap in supply and demand in the fourth quarter but it gradually narrowed.

We judge the supply and demand of electrolytic aluminum from the fourth quarter of 2019 to the first half of 2020. Under the premise that the production capacity of electrolytic aluminum is in line with expectations, the demand side will lower the net export expectation of aluminum. Domestic sales began to gradually pick up in the fourth quarter, and the growth rate returned to 0.5%. The cumulative year-on-year growth rate of apparent consumption in 2019 is -0.5%. Then in 2019, the gap in electrolytic aluminum in the fourth quarter was 240,000 tons, but the gap between supply and demand showed a gradual narrowing and will be turned into excess in the first half of 2020.

2. The production capacity of electrolytic aluminum continued to be stimulated by the profit, and the supply gradually increased.

Since the third quarter, the profit of electrolytic aluminum smelting has continued to be high, stimulating the pace of re-production and new production of smelters. Therefore, the production capacity has been continuously improved in the fourth quarter. It is expected that the operating capacity will reach 36.92 million tons by the end of 2019, and reach the middle of 2020. With a pressure of 38.55 million tons, supply pressure has gradually emerged.

3. The exporting declines seriously and domestic demand may improve.

Under the influence of trade friction and the continued weakness of overseas manufacturing, China’s unwrought aluminum and aluminum exports have fallen sharply since July. At the same time, the ratio of internal and external ratios continued to remain high. Considering the uncertainties in trade issues, overseas demand is difficult to boost due to macroeconomic pressures, so the short- and medium-term export expectations are lowered. On the domestic demand side, the state has continuously introduced policies to stimulate consumption, bottoming out the macro economy, the automobile market is gradually picking up, and the post-installation of real estate is still expected. Therefore, the growth rate of domestic demand is expected to improve compared with the third quarter.

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