Consumption structure: the proportion of real estate declines, and new energy leads the growth of demand

my country's electrolytic aluminum terminal consumption is dominated by construction, electronic power, and transportation, accounting for 69% of the total domestic electrolytic aluminum consumption in 2020. Among them, the construction industry is mainly used for doors and windows, curtain walls, decoration and other scenes of completed houses; the electronic power industry is mainly used in photovoltaic frames, transformers, overhead wires and other fields; the transportation industry is mainly used in automobiles, rail transit, etc.

The proportion of aluminum used in my country's construction industry has continued to decline, from 32% in 2016 to 29% in 2020, and more demand in the fields of transportation, power electronics, and packaging will bloom. In particular, benefiting from the significant trend of new energy vehicles and lightweighting of car bodies, aluminum for transportation continues to rise, leading the growth of aluminum demand. Under the background of stable growth, new energy infrastructure is also expected to exert force, and the construction of photovoltaics and power grids may promote a large increase in the proportion of aluminum used in the electronics and power industries.

New energy demand: Lightweight driving the rapid growth of automotive aluminum

New energy vehicles: According to IAI data, in 2022, the single-vehicle aluminum consumption of pure electric passenger vehicles will be 188 kilograms, which is significantly higher than the 154 kilograms of single-vehicle aluminum consumption of gasoline-powered passenger vehicles. In 2021, the domestic sales of new energy vehicles will be 3.52 million, a year-on-year increase of 165.1%, supporting the growth of my country's automobile sales from negative to positive. According to data from the Ministry of Industry and Information Technology, the penetration rate of my country's new energy vehicle market in Q1 2022 has reached 19.3%, a year-on-year increase of 11.4pct, and an increase of 5.9pct over the whole year of 2021. The increase in the penetration rate of new energy vehicles provides sufficient impetus for the growth of automotive aluminum.

New Energy Demand: Upgrading the PV Industry Demand Expectation

Under the background of steady growth, new energy infrastructure will exert its strength. It is estimated that the photovoltaic industry will use 3.24 million tons of aluminum in 2022, a year-on-year increase of 500,000 tons. The demand for aluminum in the photovoltaic industry is mainly divided into two parts: components and brackets. According to Antaike's calculations, the amount of aluminum used for photovoltaic frames is about 13,000 tons/GWh, and the amount of aluminum used for photovoltaic installed brackets is about 7,000 tons/GWh. We estimate that the newly installed photovoltaic capacity in China will be about 80GW in 2022. Based on this, it is estimated that the amount of aluminum used in my country's photovoltaic industry will reach 3.24 million tons in 2022, an increase of 18% year-on-year and an increase of about 500,000 tons.

Consumer Aluminum: Rapid Growth of Aluminum for Packaging

The packaging industry has shown the new feature of "consumption upgrade", which has promoted the rapid growth of domestic aluminum consumption for packaging. According to SMM data, from 2017 to 2020, the domestic aluminum for packaging was 3.20, 3.68, 3.87 and 4.18 million tons respectively, with a compound annual growth rate of 9.3%, ranking first in terms of growth rate in various application fields. Especially in the aluminum foil segment for packaging, there is still a lot of room for improvement in the penetration rate of consumer aluminum foil.

In 2021, my country's packaging aluminum foil will only account for 37% of the total consumption, and there is still a big gap between the consumption of 60-70% in developed countries such as Europe and the United States. With the gradual strengthening of food packaging concepts such as "freshness", "safety" and "hygiene", there is a strong demand for single and double zero foils in the aseptic packaging market. New consumer groups such as the post-90s and post-00s who pursue high-quality life have gradually become the main consumption force. Products such as single-zero foil and double-zero foil will benefit from their fashionable and refined consumption concepts and achieve rapid growth.

Aluminum for Power Electronics: Speeding Up UHV Construction

During the "14th Five-Year Plan" period, my country's energy consumption structure will accelerate the transformation to clean energy, and UHV power transmission is the main means to solve long-distance large-scale power transmission. According to the "Carbon Peak, Carbon Neutral" Action Plan issued by the State Grid, it is planned to build 7 circuits of UHVDC during the 14th Five-Year Plan period, and increase the power transmission capacity by 56 million kilowatts. By 2025, the company's operating areas will be inter-provincial and inter-provincial. The regional power transmission capacity will reach 300 million kilowatts, and the proportion of clean energy transmission will reach 50%. In 2030, the inter-provincial and inter-regional power transmission capacity will increase to 350 million kilowatts.

Aluminum for construction: it will take time for the real estate financial policy to take effect

Considering the rising consumption of aluminum per unit area, even if the real estate market temporarily turns from growth to decline, the demand for aluminum in the construction sector is still resilient:

a) As of March 2022, the cumulative value of domestic real estate development investment was 2.78 trillion yuan, a cumulative increase of 0.7% year-on-year, and the growth rate decreased by 24.9 pct compared with 2020; the cumulative area of housing newly started decreased by 17.5% year-on-year; the cumulative area of housing completed A year-on-year decrease of 11.5%; the cumulative sales area of commercial housing decreased by 13.8% year-on-year. The recent real estate financial policy has released a signal to support the reasonable financing needs of housing enterprises and better meet the reasonable housing needs of home buyers, and it is expected that the marginal improvement will gradually be reflected.

b) After overcoming the impact of the epidemic, the real estate completion cycle is expected to continue in 2022. The construction period of real estate is about 3 years, and the new construction of houses is generally used to predict the completion of houses three years later. From 2018 to 2019, the growth rate of new housing construction area in China was relatively high, with a cumulative year-on-year growth rate of 17.2% and 8.5%, respectively, and is still in the completion cycle in 2022.