A Review Of China's Aluminum Industry In 2018

- Mar 07, 2019-

The basic pattern of the world economy in 2018 can be summed up in eight words: moderate recovery and obvious differentiation. Growth accelerated in the United States, slowed slightly in the euro zone and Japan, and lost momentum in some emerging economies. Although the global economy will continue to recover in the near future, trade frictions have increased the uncertainty in the operation of the global economy. The global economy has been subjected to multiple tests, including declining trade, rising inflation, shrinking global liquidity and financial fluctuations in emerging economies.

The supply side is increasingly constrained by weak demand. Production is slowing down. The real economy is generally suffering from operational difficulties. GDP growth for the year was 6.6 percent, down 0.3 percentage points from a year earlier. This is related to the overall slowdown in investment growth in 2018. At the same time, trade frictions between China and the us are gradually escalating, making external demand suffer a great impact.

Non-ferrous metal industry market supply and demand basic balance. The output of 10 non-ferrous metals reached 56.879 million tons (data of the national bureau of statistics, the same below), up by 6.0% year on year. In terms of price, it shows a pattern of high volatility and falling back. At the end of 2018, the closing price of all the LME 6 base metals futures for march is lower than the closing price at the end of last year, with the average annual price rising by 5 and falling by 1. On the Shanghai stock exchange, the closing price of the march futures of six base metals increased by 5 percent over the closing price of the previous year, while the average annual price of the four base metals on the domestic spot market rose by 2 percent over the previous year. Benefit respect, countrywide nonferrous metal enterprise appears achieve income growth rate to drop, the situation that profit drops. For the whole year, 7,904 non-ferrous metal industrial enterprises above the designated level realized main business revenue of RMB 4,990,500 million, up 8.7% year-on-year, and realized total profit of RMB 164.37 billion, down 7.7% year-on-year. More than 1,600 of the 7,904 companies reported losses. The losses totaled 43.27 billion yuan, an increase of more than 70 percent year-on-year.

In 2018, the international aluminum market fluctuates with the tide, and the price presents a wide range of shocks. Aluminum prices in the first half of the year by the United States sanctions rusal, hydro alumina plant production cuts and other events, LME aluminum prices soared to a high in April this year, since then to maintain the downward pattern. In the second half of the year, as trade frictions between China and the United States gradually escalated, aluminum market performance was low, and prices all the way to the bottom. To December, stop falling rebound.

Shanghai aluminum basically experienced five stages: from the beginning of January to the end of March

 2018, aluminum prices gradually went down, dragging down other non-ferrous metals, the reason should be related to the heating season aluminum production reduction is far less than expected; From the beginning of April to the middle of June, aluminum prices rebounded, especially in the early part of April, rising strongly. From mid-june to mid-july, aluminum prices continued to decline due to weak terminal demand. From the middle of July to the end of August, due to the impact of domestic environmental protection policies on the upstream of aluminum industry, the price of northern ore increased the cost of alumina due to the high environmental protection. In addition, the news of the strike of alumina in Australia and other unexpected events occurred outside the United States caused a shock rebound in aluminum prices. After September, due to the postponement of international sanctions on rusal and the planned resumption of production by norsk hydro, domestic environmental protection restrictions on production weakened, resulting in still sluggish aluminum terminal consumption, and aluminum prices continued to decline. On December 28, 2018, Shanghai aluminum for march delivery closed at 13,695 yuan/ton, down 11.2 percent year-on-year. The average SHFE spot and three-month futures prices for the year were 14,251 yuan and 14,432 yuan per ton, respectively, down 1.7 percent and 1.6 percent from 2017.


In 2018, due to supply-side structural reform, macro environment and the industry's own development, domestic primary aluminum production showed negative growth for the first time in 10 years. In 

accordance with the requirements of supply-side structural reform, illegal new and pre-built projects across the country slowed down due to the restriction of indicators, so the rapidly expanding domestic electrolytic aluminum production capacity was effectively controlled. According to the national bureau of statistics, China's primary aluminum production in 2018 was 35.802 million tons, up 7.4 percent year-on-year. Alumina output was 72.531 million tons, up 9.9 percent year-on-year. Aluminum production reached 4.5546 million tons (according to preliminary calculation, there are about 10 million tons of inter-enterprise repeat statistics in aluminum production data), up by 2.6% year on year. In terms of operation, the profit of aluminum smelting enterprises and aluminum processing enterprises decreased significantly at the same time. Among them, the annual profit of aluminum smelting enterprises was 11.17 billion yuan, down 13.41 billion yuan, down 54.6%. The annual profit of aluminum processing enterprises reached 25.36 billion yuan, down 11.63 billion yuan or 31.5% year on year.

Medium "issued by the China nonferrous metals industry association of the aluminum electrolysis industry climate index monthly report pointed out that at the aluminum electrolysis industry climate index monitoring results show that in December 2018, the climate index is 27.6, the second consecutive month in" slant cold "interval, the industry generally continued weakening of consumption, prices are low, running efficiency decline, increased trade friction. Since July 2018, the leading composite index has declined for six consecutive months, falling to 64.4 in December, indicating that the industry still faces downward pressure and risks. China aluminum smelting industry boom index trend see figure.