Idle aluminum capacity is just around the corner and expects to achieve a return to production

On April 10, the spot price of electrolytic aluminum Shanghai reached RMB 14,820.00 per ton. This means that domestic electrolytic aluminum manufacturers will be able to change the dilemma of sustained losses and have a certain amount of profitability. With the encouragement of local governments, domestic idle production capacity is ready to be realized, and it hopes to realize the profit from the resumption of production on the basis of the current aluminum price.

“It is a fact that some idle capacity is being put into production continuously, this is a fact.” Lang Taizhan, Aluminum Division Director of China Nonferrous Metals Industry Association, said, “But one thing is for sure, if domestic idle capacity is restored, the current price is estimated. Can not keep it, this situation is more serious."

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In January-February this year, nearly 40% of electrolytic aluminum capacity in Henan Province was shut down. To this end, Henan Province plans to establish a 500,000-ton electrolytic aluminum reserve and establish a linkage mechanism between electrolytic aluminum reserve and pledge ** to help some companies that have stopped production to actively restore production capacity and ease the current operating difficulties of the electrolytic aluminum industry.

According to the requirements of the Henan provincial government, all electrolytic aluminum companies that enjoy a reserve policy and a direct supply price must resume production capacity by the end of March. Analysts in the industry said that this shows that the premise of the government's purchase and storage is that enterprises that have stopped production must restore production capacity, otherwise they will not be able to enjoy preferential policies. In response, Henan Provincial Development and Reform Commission Industry Department officials declined to comment.

Lang Dazhan said that he had not heard that the government would encourage the aluminum plant to restore idle capacity. "The government's policy is to collect reserves. Since it is necessary to collect reserves, why should we encourage the resumption of production? This is a contradiction." Lang Dazhan said, "But there are quite a few companies that have profitability under the current prices. Some local governments are secretly doing it.”

A local private aluminum plant in Luoyang City is planning to restore some of its production capacity. A related person in charge of the plant said that the current aluminum price has a certain profit margin for the company and is considering restoring some of the production capacity. However, the source did not want to disclose how much production capacity will be recovered. "Recovery can make money, why not recover?"

Since July last year, domestic electrolytic aluminum prices have plummeted by more than 55%. The London Metal Exchange (abbreviation: "LME") price dropped from $3,380 per ton in early July to about $1,530 per ton today. This directly led to the domestic electrolytic aluminum producers have to close the existing capacity to stop loss.