Debon Securities: Electrolytic aluminum profits are expanding rapidly, and the boom is expected to continue

The Zhitong Finance App learned that Debon Securities released a research report saying that in terms of supply, the operating capacity of electrolytic aluminum is at a high level. Currently, the operating rate of the electrolytic aluminum industry has reached 96.5%, and there is limited room for further improvement. At the same time, demand for electrolytic aluminum is expected to increase in 2025, driving the continued boom in the electrolytic aluminum industry. Furthermore, it is expected that the subsequent increase in alumina production capacity may reduce the cost level of electrolytic aluminum, driving aluminum companies' profits to continue to be high. As industry costs continue to fall and demand continues to improve, it is recommended to keep an eye on the electrolytic aluminum industry.

The main views of Debon Securities are as follows:

Costs continue to decline, and the industry's profit level has increased significantly

Recently, there has been a marked improvement in the profits of the electrolytic aluminum industry. As of March 10, 2025, the average domestic price of electrolytic aluminum was about 20,770 yuan/ton, and the price of alumina was about 3,360 yuan/ton, with changes of 5% and -40% respectively from the level at the beginning of the year. Driven by the rise in the price of electrolytic aluminum and the correction in alumina prices, the profit of aluminum companies reached a high level. As of March 10, 2025, the average profit of the domestic electrolytic aluminum industry reached 33,54.51 yuan/ton.

Operating capacity is at a high level, and there is limited room for further improvement

On the supply side, for the week ending March 9, 2025, the electrolytic aluminum industry had a theoretical operating capacity of 43.6 million tons. Among them, the Sichuan region continued to resume production early costs and production capacity due to technical reforms. Some electrolytic aluminum companies in Shanxi also released production capacity due to partial cost cuts. Individual electrolytic aluminum companies in Guizhou cut production slightly as a result of maintenance in 2024, and recently indicated that they are preparing to resume production. Corresponding to the current total production capacity of 45.17 million tons, the current operating rate of the electrolytic aluminum industry has reached 96.5%, and there is limited room for further improvement.

Industry demand is expected to increase, driving the industry's continued prosperity

Demand for electrolytic aluminum is expected to increase in 2025, driving the continued boom in the electrolytic aluminum industry. From 2022 to 2024, according to Baichuan Yingfu data, China's consumption of electrolytic aluminum was 40.35 million tons, 42.76 million tons, and 41.26 million tons respectively. Among them, demand for electrolytic aluminum declined in 2024 due to the influence of real estate and the like. However, looking ahead to 2025, it is expected that the real estate sector's impact on electrolytic aluminum will weaken under the influence of a low base, while transportation, electricity, etc. will increase. Assuming that the consumption of electrolytic aluminum remains at the CAGR of the past three years, the consumption of electrolytic aluminum in 2025 will be around 42.47 million tons, which is expected to increase significantly from 2024.

Alumina prices may continue to decline, driving the industry's profits to continue to rise

Alumina's new production capacity was increased on a large scale in 2025. Judging from the new production capacity situation, the scale of additional domestic alumina production capacity in 2025 may be 10.3 million tons. As of February 2025, China's total alumina production capacity was 10,702 million tons, and most of the new production capacity will be put into operation after mid-2025. It is expected that the subsequent increase in alumina production capacity may reduce the cost level of electrolytic aluminum, driving aluminum companies' profits to continue to be high.

Risk warning: Overseas demand falls short of expectations, mine-side prices fluctuate greatly, and the global economy is in recession.