Aluminum companies collectively cut output to release the bid signal.
Repeated construction leads to overcapacity. China's aluminum prices continue to fall, and in 2015, they hit a low point. Most of the aluminum processing industry has lost money. In the first quarter of 2016, though prices rose slightly, but has recently entered the downward spiral, in this context, six companies such as chinalco has reached an agreement that will be in Shanghai futures exchange prices fell to 11500 yuan/tons joint production. The industry believes that the six companies are releasing production cuts, and the main purpose is to reduce expectations and raise prices.
The kunming conference tasted sweet.
Chinalco, and other enterprises to reach an agreement of movements happening in the China nonferrous metals industry association convened meetings, to participate in enterprise in addition to chinalco also includes national electric cast, China hongqiao, jisco group, yunnan aluminum, jinjiang group five key aluminum enterprises, the six aluminum production capacity of enterprises accounted for more than half of the country's total. According to people familiar with the situation, the idea of reducing production is only agreed upon, and the specific content needs further coordination and consultation.
It is reported that the aluminum industry is in difficulty, and the practice of self-rescue by enterprises has been used in the kunming symposium on China nonferrous metals industry at the end of last year.
On December 10, 2015, China nonferrous metals industry association symposium held in kunming, chinalco, the state 14 backbone, such as electric cast, yunnan aluminum electrolytic aluminum enterprises to attend, a pledge production 4.91 million tons in 2015, has been built in capacity for at least a year temporarily not put into operation.
Kunming meeting has played a certain effect, in the first quarter of 2016 domestic electrolytic aluminum production is 7.368 million tons, down 1.9% year on year, the domestic aluminum market oversupply situation presents a improved, prices rose to 12000 yuan/tons. At the end of April, the price of aluminum fell by more than 10%, and the lowest price was 11,590 yuan on June 8. In addition, June is the traditional low season in aluminum market. From the previous years, the demand for aluminum in this period is weaker and the aluminum price will enter the lower channel.
Six companies, such as chinalco, are once again talking about cutting production, hoping to carry the coming slump through the huddle. "Companies are releasing less production information, more in anticipation of aluminium production, and supporting aluminum prices," zhang meng, a nonferrous metals analyst, told Beijing business daily.
Supply and demand are crowded.
Since 2001, China's aluminum industry has developed rapidly. In 2015, China's electrolytic aluminum, alumina production capacity and production have accounted for about half of the world, and the overcapacity is serious.
According to the national bureau of statistics, in 2015, the production of alumina in China reached 589.78 million tons, and the electrolytic aluminum output was 31,413 thousand tons, and the output of aluminum was 523.61 million tons. The production of electrolytic aluminum and alumina in China accounts for 54.5% and 48.8% respectively of the global aluminum and alumina production. In 2015, the production rate of alumina in China was about 88%, the utilization rate of electrolytic aluminum was 75.4%, the capacity utilization rate of aluminum processing material was 70%, and the extrusion material output was 19300kt, and the capacity utilization rate was about 68%. Capacity utilization rate of forging products is 67%.
At the same time, the downstream consumer industry continues to be depressed, making aluminum processing industry profit space compression.
Aluminum's main demand from the construction industry, transportation, electric power, machinery demand accounted for 33% and 25% respectively, 16.3%, 8.9%, but the industry development in 2015 have been through winter, including real estate general slowing significantly.
In 2015, the consumption of domestic real estate aluminum (including the amount of old buildings used in each month) was about 11,085,000 tons, down 1.2% from the previous year. Automotive aluminum volume reached 3.12 million tons, up 3.2% year on year, growth is down nearly 3% from the same period a year earlier, and nearly 4% lower earlier than expected, annual amount of aluminum significantly below expectations of about 3.31 million tons.
Due to the dual role of supply and demand, aluminum enterprises have difficulty in operation. Results show that in 2015, chinalco to inventory to sell assets to achieve through shut down production line, the loss of 16.2 billion yuan, from 2014 to 2015 turn a profit, profit of 206 million yuan, after deducting non-recurring gains and losses, the company's net profit loss amount is 6.432 billion yuan.
Less incentive to cut production.
"But even if the aluminum price falls to 1.15 million yuan/ton, the six companies are less likely to cut production." Mr Zhang said of the aluminium industry's drive to cut production. "First of all, the meeting is not a specific cuts, followed by the aluminium cost less than 11000 yuan, 11500 yuan more than 80% of capacity can be profitable, the six companies also have larger cost advantages of leading enterprises, profits is higher than the industry average, actual production and lack of power."
When aluminum prices rose in early 2016, the company's performance also showed that. From Shanghai nonferrous, according to data from the network with the rise in prices late last year, in the first half of 2016 domestic electrolytic aluminum production capacity of about 500000 tons, in May China's electrolytic aluminum production is 2.68 million tons, monthly production hit a record high since November 2015.
It is worth noting that in December 2015, the production of electrolytic aluminum in China was 2.531 million tons, a decrease of 152,000 tons compared with the previous month, and the reduction of 4.91 million tons at the end of the year, which was only reasonable after the reduction of 400,000 tons.
"The reason for the lack of production is likely to be a rebound of around 1,000 yuan in December, leaving some of the lower-cost aluminium smelters temporarily out of production." Industry insiders say.
There are also different voices in the industry. Some experts say that the price of electrolytic aluminum needs to be about 13,000 yuan/ton before a large number of products can be restored.
But the fact is that in 2016, there are 807 million tons of aluminum smelting capacity under construction and construction, with a big chance of producing 3.52 million tons in 2016. China hongqiao group, the world's largest aluminium producer, has made a high-profile announcement that it will raise production capacity by 800,000 tonnes to 6m tonnes in 2016.
"Once the price of aluminium has rebounded to a higher level, the promise of a cut in production will start to be elastic, and the supply glut will worsen, and even in 2017 it will be difficult to resolve the pattern of excess." "One expert cautioned.