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Home - News - Yao Xizhi: in the future, the global alumina increment will shift to areas outside China.

Yao Xizhi: in the future, the global alumina increment will shift to areas outside China.

April 9, 2020

On April 7, Yao Xizhi, chief analyst of Chinalco International Trading Group, attended an online live event on the Shanghai Futures Exchange and talked about the development environment of the global alumina industry. Yao Xizhi said that in recent years, due to the impact of domestic supply-side reforms, the rigid demand for alumina in China has been significantly reduced. In the future, limited by the ceiling of electrolytic aluminum production capacity, the total scale of domestic alumina production capacity may be reduced. In addition, in recent years, the utilization rate of alumina capacity at home and abroad has been maintained at a low level, and the growth rate of expansion has slowed down. and the cost of some parts of the country is higher than that of Australia, Brazil, India and other countries. It is expected that the future alumina production capacity increment is mainly concentrated outside China.

In view of the development environment of the electrolytic aluminum industry, Yao Xizhi said that since 2016, the overall utilization rate of electrolytic aluminum capacity abroad has been more than 80%, while the utilization rate of domestic electrolytic aluminum capacity has been more than 85% in the same period, with the highest being close to 90%. At the same time, after the supply-side reform, domestic electrolytic aluminum is moving towards a more sustainable and healthy development, regardless of industrial layout, structural adjustment, energy saving and environmental protection, are more in line with the international market. In the next two years, the increment of global electrolytic aluminum production capacity will mainly rely on areas with rich energy and low electricity prices, and domestic capacity growth will be concentrated in areas with abundant hydropower and coal resources, such as Yunnan and Inner Mongolia. The global competitiveness of China's electrolytic aluminum industry will increase year by year, while foreign capacity growth will be concentrated in energy-rich countries such as Russia, India and Bahrain.

Talking about the impact of the novel coronavirus epidemic on the aluminum industry, Yao Xizhi pointed out that from the perspective of the industry as a whole, the current novel coronavirus epidemic has little impact on the upstream production of the aluminum industry. At present, there are some small-scale flexible production of electrolytic aluminum in China, but this elastic scale production is not enough to reverse the overall trend of market supply and demand. From the perspective of consumption, the recovery of domestic rigid demand is still uncertain, while exports may have a phased negative growth risk, and the recovery of aluminum consumption is expected to be limited in the short term. In terms of alumina, Yao Xizhi believes that compared with electrolytic aluminum, the production characteristics of alumina determine its higher elastic regulation and control ability. Once the flexible production of alumina is started, the price of alumina may be bottomed out in stages.

In addition, Yao Xizhi believes that the listing of alumina futures will be conducive to the formation of the market-oriented pricing mechanism of the industry, and will also affect the pricing influence of Chinese alumina enterprises in international trade, and provide effective risk management support for enterprises related to the aluminum industry chain.