The production of electrolytic aluminum in China began to increase substantially since 2001. In 2001, the output was 3.43 million tons. In 2002, the output was 4.4 million tons. In 2003, the output was 5.5 million tons. In 2004, the output was 6.7 million tons. Aluminum consumption was 3.53 million tons, 4.2 million tons, 5.09 million tons and 5.97 million tons, respectively, and the growth rate was lower than the output growth rate. The aluminum market in China has been entering a state of continuous oversupply since 2002. Due to the rapid expansion of electrolytic aluminum production capacity, the phenomenon of repeated construction was serious. In 2003, the state began to restrict excessive investment in electrolytic aluminum and other industries. In 2004, more stringent control measures were implemented and the electrolytic aluminum industry lost its momentum of rapid growth. From January 1, 2005, China cancelled the 8% export tax rebate for aluminum, and imposed a 5% export tax on copper and aluminum exports. This will increase domestic aluminum exports by 13% on the original basis. In fact, many small and medium-sized aluminum smelters in China rely mainly on export tax rebates to survive, and export tax rebates are now canceled and at the same time, the export tax is increased by 5%. The fight against these companies is undoubtedly enormous. Affected by the above policies, it is expected that the growth rate of electrolytic aluminum production in China will continue to decline this year, the growth rate will be reduced to about 12%, and aluminum production will reach about 7.5 million tons. Assuming that China's GDP will increase by about 8.5% in 2005, it is expected that China's primary aluminum consumption will increase by approximately 15.8% to approximately 6.91 million tons in 2005. Alumina is the main raw material for the production of electrolytic aluminum, which accounts for about 40% of its cost. At present, China's alumina production cannot meet the needs of the electrolytic aluminum industry. In 2003, the electrolytic aluminum industry required 11.5 million tons of alumina, while the domestic production of aluminum oxide was about 5.8 million tons, which can only meet the needs of electrolytic aluminum production capacity of 50.43%. Since 1 ton of aluminum ingot production requires 2 tons of alumina, this year, based on the forecast of 7.5 million tons of aluminum production in China, it needs 15 million tons of alumina. Chinalco said that in 2005 Chinalco expects to produce 8.5 million tons of alumina. Chinalco's alumina production generally accounts for 97% of the country's total production. Therefore, China still needs to import 624 tons of alumina to meet domestic aluminum ingot production needs. In other words, in 2005, China’s alumina imports will increase by 370,000 tons on the basis of 2004. China's imported alumina accounted for more than 60% of the world's total spot trade, and its quantitative changes have a great impact on international alumina prices. Therefore, the continued expansion of China’s alumina imports in 2005 has continued to be the main factor in supporting international alumina prices. At present, the price of alumina in the Mainland is 4,330 yuan per ton, which is still a long way from the import price of 4,800 yuan. It is expected that alumina prices will continue to increase this year. Keep running at high level. As a result, the cost of electrolytic aluminum in China in 2005 remains high, and objectively it will also play a supporting role for domestic aluminum prices. Due to the fact that the price of alumina as the main raw material has remained at a high level and the electricity cost has been rising, the performance of other listed companies in the aluminum industry was not due to aluminum except that the performance of Shandong Aluminum, which mainly produces alumina, has increased significantly in 2004. The price increase has improved, but it has decreased on a year-on-year basis. Excerpt: Securities Times Yao Chunlei
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