On August 28, Chinese aluminum industry released half-year performance report, its first-half operating income reached ¥70.1 billion, and the parent company it attributed is ¥4.123 billion loss. Aluminum insiders said the loss was mainly derived from aluminum price’ drop.
Data shows that in the first half of this year, Shanghai March aluminum lowest price dropped to ¥12,635/ton, back to the price 25 years ago. Despite later Shanghai March aluminum’s average price in half an year rebounded to ¥13,442/ton, but still fell by nearly 10%.
Overcapacity is the direct cause. China Nonferrous Metals Association data shows that in the first half of this year, China's electrolytic aluminum cumulative production reached 11.502 million tons, increasing by 8.9%.
At the same time, data shows that Xinjiang electrolytic aluminum production can be increased to 5 million tons by the end of this year,. From about 500,000 tons in 2011, aluminum production increased by 10 times in the last four years. Many insiders said, the reason was local goverments’ tremendous pressure to maintain growth, leading to heat the aluminum industry investment, resulting in waste and destruction of capital, resources and the environment.
High electricity grid is another reason.
Aluminum six-month notice said that the electricity has accounted for about 45% of the total cost of electrolytic aluminum. According to statistics, the electricity price (KW/h) of the aluminum industry having owned electricity is lower 2 cents than that of the aluminum industry purchasing industrial electricity, therefore the cost of electrolytic aluminum production reduced to ¥2800/ton.(chinainout.com)
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