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China's electrolytic aluminum industry has a long way to go
Recently, the problem of overcapacity in China's electrolytic aluminum has been widely debated. There is no consensus in all of them. The elimination of backward production capacity and the suppression of total capacity continue to develop rapidly has become the main task of China's electrolytic aluminum industry in the next five years. From the perspective of China's supply and demand of electrolytic aluminum in the past three years alone, in 2007, the consumption of electrolytic aluminum was 12.347 million tons, the output was 12.559 million tons, the consumption in 2008 was 8.648 million tons, the output was 9.349 million tons, and the consumption of electrolytic aluminum and aluminum in 2009 was 711.9. Ten thousand tons, the output is 7.806 million tons. Regardless of the pre-crisis or post-crisis era in 2008, China's electrolytic aluminum industry has always had the worry of overcapacity. If we open the horizon, and look at the changes in the relationship between the electrolytic aluminum production capacity and the major producing areas in the world, the Chinese electrolytic aluminum industry, which originally looked at the side of the mountain, will show its other side in front of you. Throughout the global electrolytic aluminum industry, in the market that seems to balance supply and demand, the regional market forces are changing.
In the past 10 years, the global electrolytic aluminum market has basically been in a state of steady growth, and the supply-demand relationship has been balanced. There has not been a serious excess or shortage of production. If the entire market is analyzed in a sub-region, the market changes in the electrolytic aluminum region are still very obvious.
From the 2003 to 2010 global electrolytic aluminum capacity expansion sub-regional data, China's capacity expansion is the largest region, reaching 16.64 million tons, followed by the Middle East, with an additional capacity of 1.787 million tons, third place For India, the production capacity has increased by 1.016 million tons. In addition, the expansion capacity of electrolytic aluminum in Russia and Northern Europe is also very significant. The production capacity of electrolytic aluminum in Western Europe and North America has declined. The capacity of electrolytic aluminum in North America has shrunk to the most, at 924,000 tons, and the capacity in Western Europe has shrunk by 82,000 tons. The shrinking of capacity in North America and Western Europe is basically due to the elimination of old capacity.
From 2010 to 2014, the global electrolytic aluminum capacity expansion will still favor China, Russia, India, Northern Europe and other regions. Brookhurt's research data shows that China's electrolytic aluminum capacity will expand by 3.829 million tons in 2014, and Russia, India, the Middle East and northern Europe will have an expansion capacity of 1.517 million tons, 700,000 tons, 320,000 tons and 130,000 tons respectively. Moreover, the production capacity in developed regions such as North America and Western Europe will also shrink further. Based on such data, we can clearly see that electrolytic aluminum production capacity is making a big push to the low-cost areas of electrolytic aluminum production. After 2014, the world's electrolytic aluminum pattern will undergo great changes, and the focus of electrolytic aluminum production will be completely moved to the east of the world.
Cost analysis shows that the center of gravity shifts eastward
A simple cost analysis of electrolytic aluminum production shows that alumina and energy prices are a major component of electrolytic aluminum production costs. In the production cost of electrolytic aluminum, the cost of alumina raw materials accounts for 33% of the total cost, the energy cost accounts for 39%, the labor cost only accounts for 6%, the other raw material costs account for 13%, and the remaining 9%. It is the other cost necessary for production.
Look at the key areas for the expansion of electrolytic aluminum capacity in the next five years, without exception, they have a unique energy or resource advantage. Russia and Northern Europe have cheap hydropower energy, which makes them have an incomparable advantage in high-energy electrolytic aluminum production; in the Middle East as a newly emerging region, two electrolytic aluminum plants in Qatar and the UAE use local inexhaustible oil resources. Power generation has greatly reduced energy costs; although the reserves of Indian bauxite are not the largest, the taste of the ore is quite high, and the abundant boehmite resources make other major electrolytic aluminum producing areas covet, and the cheap labor is also effectively reduced. The cost of mining ore. Looking at China, the reserves of mineral resources are huge, and the vast coal and electricity resources in the western region are rich and cheap, which is the main reason for the rapid expansion of production capacity in the past 10 years. In the past few years, the inertia of investment will lead to further rapid expansion of production capacity in the future when the market is basically saturated. The eastward shift of the global electrolytic aluminum industry center will become more apparent.
Will the cost advantage be lost?
As we all know, the great development of China's electrolytic aluminum industry in the past 10 years has come from low-cost energy and bauxite prices. It is understood that the annual expansion rate of China's electrolytic aluminum industry capacity is around 20%, and as this trend continues, the original energy and raw material resources will be swallowed up by fierce market competition. It is expected that China's electrolytic aluminum industry will be seriously threatened by Russia, India, the Middle East, Northern Europe and other production areas in the next five years, and its advantages will be lost. Although we are still confident in the consumption of China's electrolytic aluminum based on China's urbanization and industrialization, in the medium-term and long-term perspective, China's electrolytic aluminum production faces almost all factors involved in fixed and variable costs. Stress.
Moreover, the electricity consumption of electrolytic aluminum production accounts for nearly 10% of China's national electricity consumption. The Chinese government, which faces major energy-saving and emission-reduction challenges, is naturally reluctant to see the rapid expansion of electrolytic aluminum production capacity. Looking back on the macro-control policies of the past few years, every electrolytic aluminum industry is on the list.
The combination of excessive production capacity and tight mineral resources has made China's electrolytic aluminum enterprises have to face increasingly serious production by relying on imported raw materials, and the increase in external dependence has brought more uncertainty to electrolytic aluminum production. factor. There have been such examples before: from 2003 to 2007, with the rapid development of China's industrialization, China's electrolytic aluminum industry has developed into a well-flowing type, while global alumina supply is stretched in the short term, and the spot price is from the beginning of 2003. The $268 rose to $621 per tonne in April 2006. According to the 2009 data, 46% of the raw materials needed for China's electrolytic aluminum industry come from foreign markets. Among them, the amount of imported bauxite has reached 20 million tons, equivalent to about 7.61 million tons of alumina, accounting for 28% of domestic alumina demand. %, imported 4.94 million tons of alumina, accounting for about 18% of domestic alumina demand.
Although domestic alumina production is also growing rapidly year by year, such growth continues to be poor. Alumina is an important raw material for electrolytic aluminum production. After the price has stabilized for quite a long time, it is not an idiot to dream again. Moreover, with the panic of the double-dip exploration of the European and American economies after the global financial crisis, the increase in the amount of bauxite mining has slowed down, which will eventually lead to an increase in the production costs of electrolytic aluminum enterprises.
Developing overseas resources is half the effort
Since 2007, China's electrolytic aluminum producers have launched a boom in the development of overseas mineral resources in order to seize the future resource market. However, after three years, the original ambition was replaced by the result.
China’s annual project of 10 million tons of bauxite and 2.1 million tons of alumina in Australia has been shelved; Bossa Mining’s acquisition of an 80% stake in the annual capacity of 20 million tons of bauxite in the Inchiniso region of Ghana has been shelved, and Qingtongxia Aluminum is in India. The project of 80 million tons of bauxite resources per year (50% equity joint venture) and plans to build 1 million tons of alumina capacity per year is also put on hold... The desire to invest in overseas mineral resources is good, but because of our company The first experience without overseas investment, and the second, without the assistance of experts in relevant investment, has caused foreign resource investment projects to be frustrated.
An individual investor who has had experience in mineral investment in Africa said to the author: "I look at the bauxite mine in Guinea, the copper mine in Kenya is good, we have money, buy it! You can be stupid when signing a contract. A mineral investment contract has more than 1,000 pages, the content of the regulations is quite detailed, and the mineral investment law in Africa is quite cumbersome and simply do not understand. We want to consult a lawyer, and there is no expert in the study of African mineral investment law in China. The local mine professional lawyers in Africa charge more than $1,000 per hour, which is astounding. You can’t find any items in the contract that are smuggling and slippery. We will wait for the dumb loss when the contract is signed.” The timing of investing in overseas mineral resources is still immature, and it is too early to get the right to speak in the future.
Today's China's electrolytic aluminum industry has become the largest component of the world's electrolytic aluminum industry. China's aluminum demand is also ranked first in the world for many years. In the future, China's aluminum metal market will undoubtedly become the center of the electrolytic aluminum industry in the world. But whether it is raw materials - bauxite, alumina or products - electrolytic aluminum, China still does not have pricing power. In the first half of 2010, the price of aluminum was below the cost of electrolytic aluminum, which made China's electrolytic aluminum enterprises complain. In the future, we will face a larger production scale and a larger demand market. How to make ourselves stronger? Not only in the production, but also in the right to speak, the world's electrolytic aluminum industry is the ear of the world, China's electrolytic aluminum enterprises have a long way to go.