[Chinalco.com] Since the beginning of 2012, aluminum investment has seen negative growth for four consecutive years, but by 2016, aluminum investment has experienced positive growth. This also reflects the continued expansion of aluminum prices due to the rebound in aluminum prices in 2016. The impulse of production capacity, especially local aluminum enterprises with low raw material costs and policy support.
At the working conference of the Central Financial Leadership Group at the end of 2015, the central government formally proposed supply-side structural reforms aimed at adjusting the economic structure, enabling various factors to achieve optimal allocation and improving the quality and quantity of economic growth; in 2016, it was considered In the first year of implementation of the structural reform on the supply side, the coal and steel industries became pioneers in the reform, and the targets for capacity reduction were all exceeded.
In January this year, after the National Development and Reform Commission and the State-owned Assets Supervision and Administration Commission successively stated that they will accelerate the supply-side structural reforms in other industries, the market generally expects the non-ferrous industry to become the next frontier for reform. In particular, electrolytic aluminum, as a predominant variety, suffers from excess production deficiencies, and losses of some companies have become the norm. It is expected to become the preferred structural reform for the non-ferrous sector.
So, what similarities and differences between the supply-side structural reforms of the aluminum industry and the coal and steel industries? In the future, what is the market outlook for aluminum? With these questions, the reporter recently paid an exclusive visit to the literature army of the vice president of the China Nonferrous Metals Industry Association.
Strictly control new production capacity
“We always believe that the aluminum industry is still relatively healthy. There is a surplus in the market economy. It is normal to have excess competition, but if there is too much surplus, excessive competition will occur and prices will be affected by excessive competition. Therefore, we must consider how to maintain the stability of the market,†the literature army told reporters.
According to the literature army, the reason why the supporting aluminum industry is relatively healthy is that the consumption of aluminum is increasing. Especially in recent years, the application of aluminum in the transportation field has been continuously expanding, and accordingly, the demand for aluminum is also gradually increasing; precisely because of this The focus of structural reform on the supply side of the aluminum industry is different from that of the coal and steel industries.
“The concept of “capacity removal†means that the total amount is already large, not only cannot be added, but also the original capacity should be removed.†The literature army pointed out to reporters that the most important issue in solving the current aluminum industry issue is to strictly control the new increase. Capacity, "Strictly controlling new production capacity cannot be increased at all. Instead, we must strictly control the growth rate of production capacity in line with the increase in demand."
The reporter noted that in 2016, No. 42 (abbreviated as No. 42) of the State Administration of the People's Republic of China proposed that the relevant provisions of the “Guiding Opinions of the State Council on Resolving the Contradiction of Serious Overcapacity†should be resolutely implemented, and that new electrolytic aluminum (reform and expansion) must be implemented. To build projects, we must strictly implement the capacity equalization or reduction of replacement programs and strictly control new capacity.
According to the literature army, the main measures for the strict control of new production capacity in the aluminum industry are the same amount and reduction of replacement. To build new production capacity, there must be replacement indicators, which can then be established after the government departments have filed and approved the project. "If the implementation of Circular 42 is strictly followed, the situation in the aluminum industry is still good. The key issue is the intensity of policy implementation. If the implementation is loose or not implemented, many new production capacity may be built up."
In fact, since the beginning of 2012, aluminum investment has seen negative growth for four consecutive years. However, by 2016, aluminum investment has experienced positive growth. This also reflects the fact that due to the rebound in aluminum prices in 2016, aluminum companies still have capacity expansion. Impulse, especially local aluminum companies with low raw material costs and policy support.
In addition, it is worth noting that, last year, the central government set quantitative targets for the production of coal and steel, but the aluminum industry does not have a similar target or timetable.
According to data provided by the literature army to reporters, the current aluminum industry still has about 2.6 million tons of uncompetitive production capacity. This part of the production capacity can theoretically be resumed, but due to high cost factors, it is actually impossible to resume production. To withdraw from the market, it is only at the moment of statistical capacity.
Expanding aluminum applications
The literature army believes that apart from strictly controlling new production capacity, another connotation of structural reforms in the supply side of the aluminum industry is to cultivate markets and guide consumption.
“We need to know and study what the downstream needs and what downstream are potential markets. Expanding aluminum applications allows the downstream to expand consumption of aluminum. For the upstream, it is to expand effective supply, such as aluminum trailers that have been promoted in recent years. Aluminum alloy decorative panels, aluminum alloy building templates, etc.." Said the military literature.
The reporter noted that No. 42 also pointed out that it is necessary to develop intensive processing. Efforts will be made to develop passenger car aluminum alloy plates, aviation aluminum alloy plates and marine aluminum alloy plates. At the same time, non-ferrous metal industries and downstream application industries will be encouraged to strengthen cooperation in design, production, use, and maintenance, and expand consumption areas and space.
According to the literature army, in the past few years, emphasis was placed on expanding the application of aluminum in the industrial sector. In 2017, the company plans to promote the application of aluminum in households, that is, downstream consumers from industrial expansion to civilian use. "The field of application has widened, but this change does not mean that the application in the industrial field is no longer emphasized, but rather more diversified than before."
The literature army told the reporter that compared with wood, aluminum has the advantages of light weight, non-deformation, easy cleaning, and no odor; at the same time, the application of aluminum in the home area can be reduced, and the consumption of wood can be reduced, and it has previously been used on building templates. The successful implementation of the "Al-generation wood."
It is worth noting that at the annual work conference on the upstream and downstream cooperative mechanism of aluminum machinery for civil aircraft in January this year, Vice Minister of Industry and Commerce Xu Lejiang pointed out that the Ministry of Industry and Information Technology should work out a key work plan for 2017 as soon as possible, and production units should speed up the development and application of key grade aluminum materials. We will strive to achieve phased progress in 2017.
Although there are views that with the accelerated production of domestic large aircraft and the increasing demand for general aviation aircraft, the aviation aluminum market is expected to grow rapidly. However, the literature army told reporters that compared to other areas of aluminum demand, aviation aluminum The total amount used each year is not large, only about several hundred thousand tons.
According to data provided by the literature army, last year, aluminum for construction accounted for about one-third of downstream applications, and the total amount was between 14 million and 15 million tons. He believes that the construction of aluminum in the next decade will still be the top application area of ​​aluminum. “Always the amount of aluminum for transportation has been increasing, but it is only a few million tons at present, and it needs to exceed the amount of aluminum for construction. a long time."
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