Recently, China nonferrous Metal Industry Association (hereinafter referred to as the Association of Nonferrous Metals) Under-Secretary-General Yang Yunbo in the Commodities Market Summit forum revealed that in response to illegal electrolytic aluminum production capacity of the reorganization began, has 5.29 million tons of production capacity production, and another 5.05 million tons of construction capacity, a total of illegal violations of electrolytic aluminum production capacity of

In April this year, the NDRC, Ministry of Industry and other four ministries issued a joint “clean-up and rectification of electrolytic aluminum industries illegal project special action work plan” to clean up the new production capacity of electrolytic aluminum since May 2013. Yang Yunbo introduced that in 2014-2016, a group of industrial policy violations of electrolytic aluminum capacity has been launched, the new capacity of the speed has been far more than aluminum consumption growth.

The “plan” put forward two “immediate” requirements: that the illegal construction of the capacity of the production immediately discontinued, illegal building capacity immediately halted. In the six-month inventory, including the Weiqiao Venture Group, the letter hair group, including the industry leaders have illegal projects were shut down, two are involved in electrolytic aluminum production capacity of 2.68 million tons and 530,000 tons.

After the implementation of the capacity policy, domestic electrolytic aluminum output is an inflection point. The Association’s statistics show that in June this year, electrolytic aluminum output reached an annual high of 97,700 tons, since then began to decline. By October this year, production had fallen to 82100 tonnes a day. Aluminum prices reached 17250 yuan per ton in mid-September, also fell back to the current 14,000 yuan. Nevertheless, aluminum prices are still higher than the same period last year, the domestic aluminum smelting industry in October this year recorded a profit of 31.3 billion yuan, an increase of 79%.

At the time of large-scale clean-up of illegal production capacity, domestic electrolytic aluminum supply and demand basically maintain a balance. The association’s data said that this year, domestic electrolytic aluminum production reached about 32.3 million tons, apparent consumption of about 32.4 million tons, both year-on-year growth of a small increase of more than 1%. Yang Yunbo said that the market demand for electrolytic aluminum this year and the early years of the forecast deviation, the association of Nonferrous Metals was expected to grow up to 7%-8%, but the reality is not as expected.

The market is also divided over next year’s consumption forecasts. Pessimists believe that the decline in real estate investment growth, such as the impact of aluminum consumption and other commodities, has entered the platform period. In the optimists ‘ eyes, consumption will continue to grow as the application of aluminum alloy is opened up to new industries outside of construction.

The rise of trade protectionism in the United States and other countries will also change the export situation of China’s aluminum products, thus affecting consumption. Since last year, the United States has launched five trade surveys for China’s electrolytic aluminium industry, the latest one being a double counter survey of China’s aluminum strip this November. In October this year, the Commerce Department also ruled that imports of Chinese-made aluminium foil would be levied at a rate of 96.81% to 162.24%, which was considered “unfair” at a low price.

In the context of the uncertainty of aluminum demand, the “high pressure” policy for electrolytic aluminum industry is doomed to continue. Previously, the market for equal capacity, reducing replacement policy next year will continue to be suspicious. The policy was issued by the Ministry of Industry in 2015, “some of the production of serious excess capacity replacement implementation measures”, the industry commonly known as 127th, the policy was scheduled to expire at the end of this year.

Article 127th stipulates that, such as new electrolytic aluminum, steel and other projects, must develop capacity replacement program, the implementation of equal or reduction replacement. In other words, if you want to create a new electrolytic aluminum project, you must have completed capacity as a target replacement. Yang Yunbo revealed that the recent participation in the NDRC and the Ministry of Industry research demonstration learned that the electrolysis of aluminum next year will continue to implement equal capacity and reduce replacement policy.