SHENHUO COAL&POWER(SZ:000933)2022-12-06 02:56Group 1: Regulatory Actions and Industry Impact - The government's regulatory document (Guo Fa Industrial [2017] No. 656) on cleaning up illegal projects in the electrolytic aluminum industry is a significant follow-up to the 2015 document, focusing on projects without proper approvals from May 2013 onwards, affecting approximately 5 million tons of capacity [2] - Xinjiang has halted 400,000 tons of electrolytic aluminum capacity and is reviewing an additional 800,000 tons under construction, with a total approved capacity previously at 6.5 million tons [2] Group 2: Production Capacity and Compliance - The company has 1.46 million tons of compliant electrolytic aluminum capacity, unaffected by the "2+26" environmental restrictions [3] - The company has 280,000 tons of idle electrolytic aluminum capacity and a 1.6 million tons supply gap in alumina [5] Group 3: Cost and Profitability Analysis - The company's coal segment reported a profit of 500 million yuan in Q1, with Q2 expected to outperform [4] - Current coal prices are around 680 yuan/ton, with costs at approximately 400 yuan/ton [4] - The cost of electricity in the company's main plant is 0.043 yuan/kWh, while in Xinjiang it is 0.014 yuan/kWh, leading to a profit of 1,300-1,400 yuan/ton in Xinjiang compared to a loss of 1,000 yuan/ton in the main plant [5] Group 4: Future Development and Market Dynamics - The demand for aluminum in Xinjiang is expected to rise with the commencement of large infrastructure projects, anticipated to start in May or June [4] - The company aims for upstream and downstream collaborative development to address the alumina supply gap [5]