Recently, Yang Yunbo, deputy secretary-general of the China Nonferrous Metals Industry Association (hereinafter referred to as the Nonferrous Metals Association), revealed during the Commodity Market Summit that since the rectification of illegal and electrolytic aluminum production capacity, 52.90 million tons of production capacity has been discontinued, and another 5.05 million The construction capacity of the ton under construction was suspended, which involved a total of 10.34 million tons of electrolytic aluminum production capacity.

In April this year, the four ministries and commissions, including the National Development and Reform Commission and the Ministry of Industry and Information Technology, jointly issued the “Special Action Plan for Clearing and Reorganizing the Illegal and Irregular Projects in the Electrolytic Aluminum Industry” to clean up the newly-built electrolytic aluminum production capacity since May 2013. Yang Yunbo said that in 2014-2016, a batch of electrolytic aluminum production capacity violating industrial policies was launched one after another, and the rate of new production capacity has far exceeded the growth rate of aluminum consumption.

The "Proposal" put forward two "immediate" requirements: that the production capacity that was built in violation of laws and regulations was immediately suspended, and the capacity for illegal construction and construction was immediately suspended. During the six-month inventory, all the industry leaders including Weiqiao Venture Group and Xinfa Group were shut down. The two companies involved 2.68 million tons of electrolytic aluminum and 530,000 tons respectively.

After the implementation of this de-capacity policy, the daily output of domestic electrolytic aluminum is turning. Statistics from the Nonferrous Association show that in June this year, the daily output of electrolytic aluminum reached an annual high of 97,700 tons, and has since declined. By October of this year, production has dropped to 82,100 tons per day. After the aluminum price reached 17,250 yuan per ton in mid-September, it also fell back to the current 14,000 yuan. Despite this, the price of aluminum has increased compared with the same period of last year. The domestic aluminum smelting industry recorded a profit of 31.3 billion yuan in the first 10 months of this year, a year-on-year increase of 79%.

At the time of large-scale clean-up of illegal and illegal production capacity, domestic electrolytic aluminum supply and demand have basically maintained a balance. According to the data of the Nonferrous Association, the total domestic output of electrolytic aluminum reached 32.3 million tons this year, and the apparent consumption was about 32.4 million tons. Both of them increased slightly by more than 1% year-on-year. Yang Yunbo said that the market demand for electrolytic aluminum this year has deviated from the forecast at the beginning of the year. The nonferrous association originally expected the growth rate to reach 7%-8%, but the reality is not as expected.

The market is also divided for the forecast of consumption next year. Pessimists believe that aluminum consumption, like other bulk commodities, has entered the platform period due to the decline in real estate investment growth. In the eyes of optimists, consumption will continue to grow as the application of aluminum alloys is expanded into emerging industries outside the construction industry.

The rise of trade protectionism in the United States and other countries will also change China's aluminum export situation, which in turn will affect consumption. Since last year, the United States has launched five trade investigations against China's electrolytic aluminum industry. The latest one is the double-reverse investigation of Chinese aluminum strips in November this year. In October of this year, the US Department of Commerce also ruled that it would impose import tariffs on Chinese-made aluminum foil, with a tax rate of 96.81%-162.24%. These goods are considered to be sold at "unfair" prices.

In the context of uncertainties in the demand for aluminum, the “high pressure” policy for the electrolytic aluminum industry is also destined to continue. Previously, the market was suspicious of whether the production capacity reduction and reduction policy will continue to be implemented next year. The policy comes from the “Measures for the Implementation of Capacity Replacement in Some Industries with Serious Excessive Capacity” issued by the Ministry of Industry and Information Technology in 2015. The industry is commonly known as Circular No. 127. The policy was originally scheduled to expire at the end of this year.

Circular 127 stipulates that if new projects such as electrolytic aluminum and steel are to be built, capacity replacement plans must be formulated to implement equal or reduced replacement. In other words, if you want to build a new electrolytic aluminum project, you must have the built capacity as an indicator to replace it. Yang Yunbo revealed that he was informed in the recent discussion and discussion meeting organized by the National Development and Reform Commission and the Ministry of Industry and Information Technology that the electrolytic aluminum industry will continue to implement the capacity equalization and reduction replacement policy next year.