Affected by trading factors, the aluminum industry made a sharp correction. However, the fundamentals are still changing in the direction of high deterministic contraction of supply. CITIC will maintain the judgment that the rise of aluminum price will continue and exceed market expectations, and the profits of the overall industrial chain will continue to widen. From the perspective of individual stock profits, industry fundamentals and industrial chain profits, the aluminum industry ushers in the layout time point of the next round of market. It is recommended to pay attention to Chinalco, sotong development and open-pit coal industry.

▍ individual stock profit: the performance of electrolytic aluminum company increased month on month with strong certainty.

We judge that the average price of 2021q3 aluminum is 20500 yuan / ton, up nearly 2000 yuan / ton month on month compared with Q2, which is much higher than the impact of rising costs such as coal price and raw and auxiliary materials, and the profit of Q3 aluminum industry chain will be further widened. Despite the disturbance of output, we estimate that the Q3 performance of the subject of A-share electrolytic aluminum increases by 10% ~ 60% month on month (excluding companies with large impairment), and the PE corresponding to the annualized performance is 7-10 times. Considering that the current aluminum price and alumina price have increased significantly compared with the Q3 average price, we expect the Q4 performance of the subject of A-share electrolytic aluminum to still grow by 10 ~ 70% month on month, corresponding to 6-7 times of Q4 annualized PE, and the high growth of electrolytic aluminum company's performance month on month has strong certainty.

▍ industry fundamentals: the level of power consumption determines that the negative impact on the supply side under power shortage and energy consumption control is greater than that on the demand side.

The market is worried about the impact of energy consumption and power shortage on the consumption of aluminum downstream, especially in processing links. The reaction indicators are the decline of aluminum processing operation rate and the accumulation of inventory. However, the characteristics of high power consumption in electrolytic aluminum production determine that it is easier to be limited in energy consumption control. Before this round of power restriction, it is affected by energy consumption control and limited production. According to SMM, from September 27, Inner Mongolia, Yunnan, Liaoning and other places plan to further limit production to a total of 790000 tons, according to the current policy. On the basis that the negative impact of subsequent supply is greater than that of demand, we judge that the rise of aluminum price will continue and exceed market expectations, and the profits of the overall industrial chain will continue to widen.

▍ industrial chain profit: pay attention to the profit elasticity of upstream alumina and anode links.

The capacity utilization rate of alumina is close to 90% of the year's high point. However, with the implementation of production restriction in Guangxi and other places, the latest weekly alumina capacity utilization rate has decreased to 84%, and the supply has changed from loose to tight balance. It is expected that the capacity of more than 5 million tons will still decline under the full implementation of the existing policies. As of September 24, the FOB price of alumina in Western Australia has increased by US $192 / T to US $492 / T compared with the low point in the third quarter, which is in the state of import loss of 500 yuan / T, which will also support the upward trend of domestic alumina price. Considering that the production limit of winter + Winter Olympics is approaching, the impact of anode / alumina is often greater, and pay attention to the profit elasticity of upstream links.

▍ medium and long term outlook: the rigid ceiling of domestic supply and the rise of overseas new costs will support the long-term central rise of aluminum prices.

The production capacity index of domestic electrolytic aluminum is determined, and the new production capacity is uncertain due to the influence of dual control objectives, and the actual ceiling may move further downward. In the general debate of the 76th United Nations General Assembly on September 21, President Xi said that "China strongly supports the green and low-carbon development of energy in developing countries and will no longer build overseas coal power projects". We believe that the window period for new low-cost electrolytic aluminum in Southeast Asia will be narrowed, and the marginal cost of incremental overseas electrolytic aluminum production capacity will further rise, In the context of new energy vehicles and photovoltaic demand for aluminum, support the long-term central upward trend of aluminum price.

▍ risk factors:

Risk of changes in energy consumption control policies, higher than expected new electrolytic aluminum production capacity, significant changes in electricity price policy, fluctuation risk of power restriction policy, lower than expected recovery of downstream consumption, and change risk of Fed policy.

▍ investment strategy:

Affected by trading factors, the aluminum industry has made a sharp correction, but the fundamentals are still changing in the direction of high deterministic contraction of supply. We maintain the judgment that the rise of aluminum price still continues and will exceed market expectations, and the profits of the overall industrial chain will continue to widen. From the perspective of individual stock profits, industry fundamentals and industrial chain profits, the aluminum industry ushers in the layout time point of the next round of market. It is recommended to pay attention to Chinalco, sotong development and open-pit coal industry.