In the pain of electrolytic aluminum

“As a stakeholder with close ties with electrolytic aluminum companies, in the production process of electrolytic aluminum enterprises, the load of power generation companies and power grids has become, and the power sector has been profitable; the downstream aluminum processing industry can also exist and have profits; local Taxes and employment have also been guaranteed; interest on bank loans has been more favorable, but in the past few years, only electrolytic aluminum companies have suffered losses, which has ensured the interests of all parties. Obviously, this is not sustainable. Several electrolytic aluminum companies, all relevant stakeholders will be included in the vortex.” This is the “big brother” of China's electrolytic aluminum company Xiong Weiping, Chairman of China Aluminum Corporation, March 7th in the third China Nonferrous Metals Industry Association three sessions The president said at the meeting. As a result, the electrolytic aluminum industry suffered a total loss and it has reached the most dangerous time.

Electrolytic aluminum industry deep in vortex

Chen Quanxun, the counselor of the State Council and president of the China Nonferrous Metals Industry Association, mentioned at the meeting of the president that since the beginning of this year, major international investment banks and domestic authoritative organizations generally believed that the prices of copper and aluminum will continue to fall in 2014, and the bottom support prices for zinc and tin have been Formed, but the power to climb sharply is still insufficient. Recently, the copper price has broken down, the cumulative decline has reached 15%, and the spot price of aluminum has dropped to 12,700 yuan/ton. Reform is the biggest dividend, but in the short term, most of the reforms face tough "hard bones." Measures such as resolving excess production capacity, preventing and controlling local government debt risks, and strictly controlling urban construction land will all enter a substantive operation stage, and inevitable pain will arise. The investigation of more than 3,500 enterprises by the State Council Development Research Center shows that overcapacity still has the characteristics of wide industry and high degree of absolute surplus. In 2013, the utilization rate of equipment in enterprises was only 72%. 68% of companies believe that it takes at least 3 years to digest excess capacity. the above. Over the past few years, the Association has done a lot of work in expanding applications and resolving excess production capacity. However, it is still difficult to promote the direct purchase of electricity from electrolytic aluminum. The aluminum structural vehicle support policy has not yet been introduced, and aluminum prices have been seriously inverted with the production costs of enterprises. The batch of high-cost electrolytic aluminum companies faced a series of problems such as personnel, debt, land, and equipment, making the task of resolving excess capacity more difficult.

Especially in the electrolytic aluminum industry, since 2012, aluminum prices have always been below the average cost line.

The interest of all parties deterred the price of electricity

Zhang Hongen, chairman of Henan Yulian Energy Group and Dai Songling, chairman of Yichuan Electric Power Group Corporation, all believe that the aluminum industry has suffered a total loss and has reached a serious point. The problem of aluminum is mainly in the price of electricity. Taking Henan as an example, in 2013, the cost of self-owned power plants of electrolytic aluminum enterprises in Henan was as high as 4 billion yuan. Last year, Henan produced 3.3 million tons of aluminum, and five electrolytic aluminum companies lost 2 billion yuan. Although there are indications that the Henan government will adopt certain policies, coordination among various departments is difficult. Therefore, when talking about the issue of transformation and upgrading, Zhang Hongen said that everyone is willing to transition. Dai Songling even said that if Henan solves the electricity price issue, electrolytic aluminum in Henan will be saved. Henan's electrolytic aluminum is no longer expanding, backward production capacity has also been withdrawn, and the downstream processing industry chain has also been supporting. Zhang Hongen said that the company he belongs to had no problems in the past few decades and laid off more than 1,000 people. This is a sign of great determination. He suggested that in terms of transformation and upgrading, the state should introduce a real policy, introduce a mechanism, and use funds and other means to help electrolytic aluminum enterprises get out of difficulty.

Xiong Weiping further mentioned that at present, the situation of the non-ferrous commodity market is very serious. The price of aluminum has returned to around 12,000 yuan/ton 25 years ago, but the current price was only 1 hair. In this case, the national electrolytic aluminum industry suffered a total loss. This process is not short-term, and there can be no illusions about the recovery of aluminum prices in the short term. The Party's 18th National Congress proposed that the market should play a decisive role in the allocation of resources. The difficulties faced by the electrolytic aluminum industry are the result of market promotion, including the participation of banks, and taking measures against the five industries with excess capacity. However, the withdrawal of production capacity is a painful and lengthy process. How to survive? It is a direct problem that everyone faces.

Power grids and banks are not merciless. Reliance on online power supply certainly cannot survive, and this faces a transition. The tightening of loans by banks and the placement of tens of thousands of employees are all difficulties that companies must overcome. Taking China Aluminum Corporation as an example, it reduced 18,000 people in the fourth quarter of last year, and this year it is expected to reduce the number of employees by 40,000.

The darkness before dawn is quite past spring

Xiong Weiping summed up the problems faced by electrolytic aluminum companies from three aspects: asset disposal, bank debt, and resettlement of laid-off workers. He said that this year is the most difficult time for the electrolytic aluminum industry, but it is also the best time to shut down and switch, and it cannot bring losses to 2015, and it can not bring in loss of assets and burdens when the market is good. There is no determination but only national policy support. Xiong Weiping said that last year, in the process of formulating policies to resolve overcapacity, the Nonferrous Metals Association actively participated in the process, reflecting the demands of member companies and enterprises. At the same time, in the formulation of national policies, such as electrolytic aluminum unified power consumption standards, to promote the implementation of various policies Recommendations on differential electricity prices were adopted to actively promote the resolution of excess capacity. He hopes that the Nonferrous Metals Association can strive for more practical policies with the state, and that enterprises with overcapacity have more appeals at the policy level.

Now is the most difficult time for the industry, and it is also the time for electrolytic aluminum companies to fight for the best interests. There are reasons for the overall losses in the electrolytic aluminum industry, and there are also reasons why the market economy cannot fully play its role. Another important reason is that competition is unfair. How to return to the starting line, in the same tax, the same responsibility, how to balance the interests of all parties, and how to maintain sustainable development, electrolytic aluminum enterprises Huashan once again on the sword, who will laugh proudly? We will wait and see.

As President Chen Quanxun said, the winter of the electrolytic aluminum industry has arrived, and the severe winter is notoriously cold, but as long as the company taps its potential, strengthens collaboration among enterprises, extends the industrial chain, and enhances the added value of products, considering that more high-end products will develop and expand. The consumption of electrolytic aluminum can usher in the spring of the industry.

After winter, it is spring. With spring, there is hope.