Analysis of the operation of the aluminum industry under the supply-side reform

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At present, China's electrolytic aluminum illegal production capacity is about 4.87 million tons. As of mid-July, China's supply-side reform of electrolytic aluminum has affected about 3.95 million tons of production capacity, including 1 million tons of capacity under construction, about 1.6 million tons of completed uncommissioned capacity and about 1.35 million tons of operating capacity. At present, the total built production capacity of Xinjiang and Shandong Hongqiao is 15.68 million tons, the compliance production capacity recorded by the Ministry of Industry and Information Technology is 10.4 million tons, the completed illegal production capacity has reached 5.28 million tons, and the production capacity under construction has not yet been approved for compliance with 2.75 million tons.

Specifically, Xinjiang stopped the construction of electrolytic aluminum production capacity projects under construction by three enterprises in Changji Prefecture in violation of regulations. Jiarun has stopped production capacity by 150,000 tons, and Xinjiang hopes to stop production by 300,000 tons (a total of 800,000 tons of illegal capacity, leaving 500,000 tons of illegal capacity). The 400,000 tons of projects suspended in violation of the law are under construction.

The four departments and committees of Shandong jointly issued the notice of "Shandong Province Special Action Implementation Plan for Cleaning Up and Rectifying Illegal Projects in the Electrolytic Aluminum Industry". So far, Weiqiao has reduced its production capacity by 25+650,000 tons of electrolytic aluminum, and the market is rumored to reduce production by a total of 2.6 million tons by October 15, but it is not yet certain whether it is a reduction in production including the heating season, which means that 1.7 million tons of production needs to be reduced. Shandong Xinfa announced that 530,000 tons of production capacity passed the production reduction review, of which 430,000 tons of operating capacity and 1.56 million tons of operating capacity.

Jinlian Aluminum has a total operating capacity of 1.05 million tons, of which 700,000 tons of compliance capacity has been reduced by 50,000 tons, and the remaining 300,000 tons are still illegal at the level of the National Development and Reform Commission.

In terms of aluminum alloy ingots: since February 28, the four ministries and commissions jointly issued the "Beijing-Tianjin-Hebei and surrounding areas 2017 air pollution prevention and control work plan", on April 5, the Ministry of Environmental Protection held a video conference in Beijing, decided to launch a one-year air pollution prevention and control strengthening supervision work for the "2+26" cities in the Beijing-Tianjin-Hebei and surrounding channels, of which Hebei accounts for 8 cities, Shandong accounts for 7 cities, Henan accounts for 7 cities, and Shanxi accounts for 4 cities. From electrolytic aluminum upstream to alloy ingots downstream, the affected enterprises are gradually expanding.

From the current situation, small aluminum alloy ingot smelting workshops have basically been banned under the policy of "three cuts and one clearance", and medium-sized aluminum alloy ingot smelters have been partially shut down and partially rectified. Most medium-sized aluminum alloy ingot smelters in Hebei were shut down. Some aluminum alloy ingot smelters in Shandong implemented production restrictions. Scrap aluminum prices also rose buoyed by the sharp rise in spot aluminum prices in the Yangtze River. Signs of a slight retreat have begun to appear in recent days. The market's expectations for supply-side structural reform are good, and aluminum prices will have a significant increase in the medium and long term compared with 2016.