By the end of 2015, domestic aluminum enterprises had shut down 8.15 million tons of electrolytic aluminum production capacity
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- Time of issue:2015-12-01
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(Summary description)In recent years, affected by many factors, such as sluggish investment demand, overcapacity and low international commodity prices, non-ferrous metal prices have been falling and hit record lows repeatedly. According to the report of China Economic Non-ferrous Metals Industry Climate Index in the fourth quarter of 2015, the ex-factory price of non-ferrous metals decreased by 13.2% year-on-year in the fourth quarter of 2015, which was in a trend of year-on-year decline for 16 consecutive quarters. Among them, the price of aluminum is 18.2% lower than the average price of 14,800 yuan per ton 20 years ago (1993-1998).
By the end of 2015, domestic aluminum enterprises had shut down 8.15 million tons of electrolytic aluminum production capacity
(Summary description)In recent years, affected by many factors, such as sluggish investment demand, overcapacity and low international commodity prices, non-ferrous metal prices have been falling and hit record lows repeatedly. According to the report of China Economic Non-ferrous Metals Industry Climate Index in the fourth quarter of 2015, the ex-factory price of non-ferrous metals decreased by 13.2% year-on-year in the fourth quarter of 2015, which was in a trend of year-on-year decline for 16 consecutive quarters. Among them, the price of aluminum is 18.2% lower than the average price of 14,800 yuan per ton 20 years ago (1993-1998).
- Categories:Industry Info
- Author:
- Origin:
- Time of issue:2015-12-01
- Views:316
In recent years, affected by many factors, such as sluggish investment demand, overcapacity and low international commodity prices, non-ferrous metal prices have been falling and hit record lows repeatedly. According to the report of China Economic Non-ferrous Metals Industry Climate Index in the fourth quarter of 2015, the ex-factory price of non-ferrous metals decreased by 13.2% year-on-year in the fourth quarter of 2015, which was in a trend of year-on-year decline for 16 consecutive quarters. Among them, the price of aluminum is 18.2% lower than the average price of 14,800 yuan per ton 20 years ago (1993-1998).
The price of non-ferrous metal precipice type drop, leading to the domestic non-ferrous metal smelting enterprise's profitability deteriorated significantly. Since 2012, China's aluminum smelting industry has been losing money for three consecutive years, and the loss area continues to expand, and the overall degree of loss continues to intensify. It is estimated that at present, the average full cost including tax in China's electrolytic aluminum industry is about 12,000 yuan/ton, and the average cash cost including tax is about 10,300 yuan/ton. That is to say, under the current aluminum price, most enterprises are still in a loss.
"Due to the overall decline of non-ferrous metal prices and seriously below the cost line, smelting enterprises have to take drastic measures to reduce production in order to deal with operational difficulties." Luo Rongjin, an analyst at the Industrial and Commercial Bank of China Investment Bank Research Center, said this has led to an unprecedented increase in the pressure on nonferrous metal smelters to reduce overcapacity, especially in electrolytic aluminum.
"In this context, electrolytic aluminum industry to break through the difficulties, from the supply side, can only shrink capacity." 'On the one hand, we will encourage uncompetitive enterprises to exit the market,' said Wen Wenjun, vice chairman of the China Nonferrous Metals Industry Association. On the other hand, guide enterprises to implement flexible production.
In order to reduce losses, many electrolytic aluminum enterprises resolutely take flexible production measures to help themselves, including stopping all or part of electrolytic cells, reducing production, overrepairing electrolytic cells in advance, delaying overrepairing cells to resume production, eliminating inefficient capacity in advance, etc. According to statistics, the current production capacity of electrolytic aluminum in shutdown reaches 4.27 million tons/year; By the end of 2015, a total of 8.15 million tons of electrolytic aluminum capacity had been shut down. Of these, 3.36 million tons were permanently shut down, 1.28 million tons were completed but not put into production, and 3.51 million tons were put into flexible production.
"In the current situation, it is both necessary and feasible for enterprises to implement flexible production." Wenxianjun said in an interview with Economic Daily that this is an effective measure to cope with the continuous decline of non-ferrous metal prices, and is also an inevitable choice to lead aluminum prices back to the right path and promote the industry to a healthy and sustainable development.
From the perspective of necessity, flexible production can not only reduce the demand for working capital, reduce the loss of cash flow, but also reduce the financial pressure of enterprises. From an economic and rational point of view, a reduction of an appropriate scale (e.g., 15% to 30% of total electrolytic aluminum capacity) will not result in a significant increase in unit costs in the current period. Because modest reduction compared with full capacity, the highest proportion of raw materials and power unit cost of the basic no change, finance charges because of liquidity to reduce also basically remain unchanged, the rise of artificial cost and depreciation cost can be controlled in 60 yuan/ton or so commonly, this has to do with the current production 1 tons of electrolytic aluminum loss compared to the size of the little cut loss-mitigation effect is significant.
From the point of view of the local government, if the enterprise is completely shut down, it will have a great impact on the local economic development, financial credit security, personnel employment, social stability, and the production and operation of upstream and downstream industries. Flexible production can avoid shutting down production lines and minimize the impact on the local economy and society.
At the same time, from the point of market demand, electrolytic aluminum consumption prospects are still good. During the period from the 10th Five-Year Plan to the 12th Five-Year Plan, with the rapid advancement of China's industrialization and urbanization, the demand for aluminum showed an accelerated growth trend, and the growth rate of aluminum consumption greatly exceeded the GDP growth level in the same period. Entering the "13th Five-Year Plan", China's economy has entered the late stage of industrialization, and the growth rate of aluminum consumption shows a slowing trend. But during this period, aluminum consumption growth was still at a high level compared with other countries. In addition, because China's aluminum consumption started late, the accumulation of aluminum "foundation" is still very thin, the use of the stock is only equivalent to the United States 1/10, the per capita stock level is lower. Compared with the developed countries, the application of aluminum in China has a wide and deep space to expand.
It is worth noting that under the action of many factors, the current electrolytic aluminum industry has signs of recovery. According to the monthly climate index report of the aluminum smelting industry in January 2016, in January 2016, the leading synthesis index of the aluminum smelting industry in China was 65.79, which got rid of the trend of continuous decline. Although the LME aluminum price has a large year-on-year decline, from a month-on-month point of view, the price in January 2016 was basically flat compared with that in December 2015, and the SHFE aluminum price fluctuated between 10,600 yuan/ton and 10,800 yuan/ton in January 2016 after a continuous recovery in December 2015.
"The recovery of aluminum prices to some extent shows that the effect of flexible production has emerged." Wenxian said, on the one hand, the reduction in production has been significant: in December 2015, the daily output of electrolytic aluminum fell to 81,600 tons, down 10,300 tons from the peak of 91,900 tons in June 2015. The reduction effect of alumina will also gradually appear in 2016. On the other hand, new growth points of aluminum consumption are constantly emerging, such as the development of automobile aluminum body and other applications, which will add new impetus to promote aluminum consumption and provide a way out for electrolytic aluminum industry to get rid of the dilemma of overcapacity
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