Since the beginning of 2012, aluminum investment has seen negative growth for four consecutive years. However, by 2016, there has been a positive growth in aluminum investment. This also reflects that, due to the rebound in aluminum prices in 2016, aluminum companies still have the urge to increase production capacity. It is a local aluminum company with low raw material costs and policy support.
At the work conference of the Central Financial Leadership Group at the end of 2015, the central government formally proposed structural reforms on the supply side to adjust the economic structure, optimize the allocation of various factors, and increase the quality and quantity of economic growth. In 2016, it was regarded as the first year of implementation of structural reforms on the supply side. Coal and steel industries became the vanguards of reforms, 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 the largest non-ferrous product, suffers from excess production deficiencies, and losses of some companies have become the norm. It is expected to become the first choice for non-ferrous industry supply-side structural reforms.
Then, what are the similarities and differences between the structural reform of the supply side of the aluminum industry and the coal and steel industries? What is the market prospect of aluminum in the future? With these problems, the reporter recently interviewed the vice president of the China Nonferrous Metals Industry Association.
Strictly control new production capacity
â€œWe 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,â€ 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. In particular, the application of aluminum in the transportation field has been continuously expanding in recent years. Accordingly, the demand for aluminum is also gradually increasing. 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.
â€œThe concept of â€œcapacity removalâ€ means that the total amount is already large, not only cannot be added, but also the original capacity must be removed.â€ 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 â€œGuiding Opinions of the State Council on Resolving the Contradiction of Serious Overcapacityâ€ 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. â€œIf 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.â€
In fact, since the beginning of 2012, aluminum investment has seen negative growth for four consecutive years, but by 2016, there has been a positive growth in aluminum investment. 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.
The data provided by the literature army to reporters shows that there are still 2.6 million tons of uncompetitive production capacity in the aluminum industry. This part of the production capacity can theoretically be resumed, but due to high cost factors, it is actually impossible to resume production, and it is ultimately necessary. Withdrawing from the market, it is only when the current statistical capacity is still there.
Expanding aluminum applications
The literature army believes that apart from strictly controlling new production capacity, another connotation of the supply-side structural reform in the aluminum industry is to cultivate the market and guide consumption.
â€œWe 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, the non-ferrous metals industry and the downstream application industries should be encouraged to strengthen collaboration in design, production, use, and maintenance to expand the consumption area 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 the home, that is, downstream consumers from industrial expansion to civilian use. "The field of application has been broadened, but this change does not mean that the application in the industrial field is no longer emphasized, but it is more diversified than before."
The literature army told reporters that compared with wood, aluminum has the advantages of light weight, non-deformation, easy cleaning, and no odor. At the same time, expanding the application of aluminum in the home area can reduce the consumption of wood, and it has previously been successfully implemented on the construction template of "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 the demand for aluminum in other fields, 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 aluminum will still be the largest application area of â€‹â€‹aluminum in the next decade. â€œAlways the amount of aluminum for transportation has been increasing, but at present it is only a few million tons. It needs to exceed the amount of aluminum for construction. a long time."
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