China\'s aluminum industry is encountering bottlenecks

At present, the domestic aluminum industry situation can show that the development of China\'s aluminum industry chain is encountering bottlenecks. If the development ideas and strategies do not change, the aluminum industry will be difficult to solve this dilemma, which is extremely unfavorable to China and the global aluminum industry. Mainly from the following aspects to seek a breakthrough:

(1) China\'s resources, energy, environment, transportation and other situations are becoming increasingly tense and unsustainable

In 2011, the electricity consumption of the primary aluminum industry accounted for 5.9 percent of the country\'s electricity generation. If the energy consumption of bauxite, alumina and aluminum processing is converted into electricity, this proportion will exceed 10 percent. When the output of electrolytic aluminum reached 20 million tons, the bottleneck of the development of the aluminum industry suddenly appeared.

(2), with the world\'s most expensive electricity prices, the production of the most electrolytic aluminum

It is understood that the average electricity price of foreign primary aluminum industry is 2.5-3 cents/kwh, while the current average electricity price of China\'s aluminum industry is 7.6 cents/kwh. Even if the future of Xinjiang and other coal-fired aluminum projects put into operation, the actual settlement price will not be less than 4.5 cents/kwh. China\'s electricity may be the most complex commodity in the world to price, and China\'s electricity prices may also be one of the few prices in the world that only rise but not fall.

(3), with the world\'s least bauxite reserves, the largest production of alumina

In 2011, China\'s bauxite reserves were only 3% of the world, but it produced 40% of the world\'s alumina. Imported bauxite and alumina accounted for 47% of the domestic market share. And this is achieved in the case of excessive consumption of domestic bauxite resources. Industry experts estimate that existing bauxite reserves will only be sufficient for the next 10-15 years.

(4) The peak of aluminum consumption growth has passed, but the industry chain investment boom continues.

From 2005 to 2010, China\'s aluminum consumption grew at an average annual rate of 18.7 per cent, but only 8.7 per cent in 2011. The golden decade of China\'s aluminum consumption has passed, and this scenario is unlikely to recur in the future. At the same time, there are still many proposed projects under construction in alumina, electrolytic aluminum and aluminum processing, with huge potential production capacity. According to incomplete statistics of the light age, the aluminum rolling capacity currently under construction exceeds 14 million tons, the aluminum profile capacity is 3.5 million tons, and the electrolytic aluminum capacity is 16 million tons.

(5), in a large number of imports of aluminum metal raw materials at the same time, a large number of exports of aluminum primary processing Products

If we consider the import and export of aluminum Products and final Products, we can clearly see that while China imports a large number of aluminum raw materials, it also exports a large number of aluminum primary processing Products and aluminum-containing end Products. In 2011, the net export of aluminum processing materials was 2.42 million tons, of which more than 75% were primary processing Products with low added value. In general, 16 million tons of aluminum metal were imported and 7.7 million tons of aluminum metal were exported in 2010.

(6) The pressure of RMB appreciation is greater, which has a great impact on the import of primary aluminum and the export of aluminum.

If the RMB appreciates by 10%, it means that the import cost of primary aluminum will be reduced by 10%, and the export cost of aluminum processed materials will increase by 10%. At that time, the economic benefits of the industry will further decline. Therefore, the current and future sustainable development of the aluminum industry is facing serious constraints. Development strategy and development path must be re-examined.

The extremely high price of alumina from 2002 to 2006, and the failure of multinational aluminum companies to follow up on the expansion of production, gave birth to China\'s alumina production capacity of more than 20 million tons. This fleeting history should be worthy of reflection. The aluminum industry made the above suggestions. Aluminum producers, unlike speculators, cannot bet on how much aluminum China will buy at a certain time and then speculate on high aluminum prices. Instead, they should take a long-term view, pay attention to long-term and stable investment returns, look forward to and maintain market stability, and promote the sustainable development of the aluminum industry.