Excess capacity in China’s electrolytic aluminum industry continues unabated

At present,aluminum industry focus on the current situation of excess capacity,how it forms and how to solve it.

As reported,two enterprises with first-class equipment,advanced management and serious cost control saw a loss of more than 0.3billion yuan of major works in 2012,which was learned about by the reporters in the interview of ZhongFu industrial and CHALCO.The consequences of excess capacity in China’s electrolytic aluminum becomes more and more obvious.

Even though the government published measures repeatedly to control the excess capacity in electrolytic aluminum in recent years,this phenomenon becomes more and more serious.Learned from the China Nonferrous Metals Industry Association,the capacity of China’s electrolytic aluminum has surpass 27million tons,but the production is only 20million tons.Meanwhile,the scale of China’s electrolytic aluminum loss achieve 93%.What is more worrying is that there are a large number of electrolytic aluminum projects will be started in China’s west district,the scale of built and under construction of more than 20million tons.

As the data shown,China’s electrolytic aluminum capacity increased to 23million tons in 2010 from 554million tons in 2003,while the actual output in that year is only 15.6million tons;the capacity is over 25million tons in 2011,but the actual output is only 17.5million tons.

To resolve the excess capacity,Chinese government has redoubled efforts from 2003.However,the repeatedly bans din’t restraint the expansion of capacity.On the basis of “non-ferrous metals industry the twelfth-Five-year Plan”,China’s electrolytic aluminum capacity will be controlled in 24million tons in 2015,but considering the under construction ,China’s electrolytic aluminum capacity perhaps surpass 33million tons in 2015.

Owning to the excess capacity,industry profits has dropped and enterprises are facing greater pressure.Only in Henan province,which is one of the center of electrolytic aluminum capacity,the total loss of electrolytic aluminum business is about 3billion yuan in 2012.

On the other hand,it is worthwhile to focus on mass westward migration and the repeated construction of coal-electric power-aluminum industry chain.Because of the lower price for electric,90% of increased electrolytic aluminum capacity turned to Qinghai province,Xinjiang province,Neimenggu province and Gansu province .The increasing capacity in west district will not only intensify excess capacity in China’s electrolytic aluminum industry also meet with the challenge of sustainable development.

The vice-general manager of CHALCO said that:”The shotting up of regional GDP is a reason of electrolytic aluminum excess capacity,and this problem also related to some deeper roots such as the fragmentation of department and industry,the unavailability of production factors etc,which reflects the urgency to deepen investment system reform.