China Nonferrous Metals Monthly

Nonferrous Metals Industry Kicked off Supply Side Reform

On December 1, a“Joint Proposal of Backbone Copper Smelting Enterprises in China” signed by 10 enterprises including Jiangxi Copper Company Limited, Tongling Nonferrous Metals, Yunnan Copper, and Jinchuan Group was formally published on www.cnmc.com.cn, the 10 copper enterprises taking part in this time’s joint production cut have a combined output accounting for 70% of national total output, these enterprises will reduce 350,000 tonnes of refined copper output in 2016.

Production cut by copper enterprises is mainly due to weak market trading condition, sluggish market kept producing historical new lows in copper price. Jiangxi Copper Company Limited said: “Market price has deviated from the industry’s fundamentals, it is hoped to give copper a good price by cutting production.”

When receiving interview from journalists, Teng Tai, President of WestBro Economic Research Institute, said that voluntary production cut by enterprises and the industry is a good thing, this is spontaneous behavior of the market, there is no government intervention, “Historically speaking, the government has repeatedly offered helping hand to the industry, for instance when electricity was in surplus it restricted electricity development, when iron and steel were in surplus it restricted production, but this is only an interim supply surplus, and does not necessarily mean permanent surplus, it needs market strength to absorb, and no administrative means by the government should be used to replace the role of market, it is inadvisable to revive old policies and planned economy for the sake of supply reform, now when we look at the nonferrous metals industry, it is a good beginning of supply reform.”

Surrounded by global cold spell of bulk commodities, nonferrous metals industry became “severe disaster zone”, in the meantime it went with the tide to become a “pioneer” of supply side reform.

Previously, in order to cope with capacity surplus, China Smelters Purchase Team (CSPT) headed by Jiangxi Copper Company Limited held a conference in Shanghai, where representatives from major domestic smelting factories gathered together. Finally, adopting production cut to address the grim challenge faced by current copper industry in production operation became consensus. On December 1 the production cut target was unveiled —— the 350,000 tonnes of production cut quota was nearly 100,000 tonnes than the previously rumored figure, 10 copper enterprises also established corresponding restraint supervision mechanism.

In the cold winter of the nonferrous metals industry, announcing proposal of production cut is not limited to copper smelting sector alone. On December 2, chief persons of China’s six major manufacturers of 200 series stainless steel held a meeting in Fu An, Fujian, after comprehensive discussion, meeting attendants reached unanimous consensus, in a gesture to actively respond to the call of “supply side reform” by the state government, they would quicken the pace of phasing out backward capacity, meanwhile, advise relevant government departments to suspend approvalof newly added stainless steel smelting capacity.

Meanwhile, nickel and zinc sectors also followed suit, on November 27, 8 Chinese nickel enterprises including Jinchuan Group, the biggest nickel manufacturer in Asia, published “Joint Proposal of Chinese Nickel Manufacturers”, 8 nickel enterprises unanimously agreed not to take part in low price competitive sale, meanwhile planned production cut; earlier on November 20, 10 Chinese zinc smelting enterprises also published the plan to cut 500,000 tonnes of production in 2016.

Joint production cut and phasing out surplus capacity are easier said than done, this is because those who receive the biggest impact are grassroots employees, state-owned enterprises especially those so-called resourceoriented state-owned enterprises often have at least several dozen thousand, or even several hundred thousand employees, coupled with family members, the number of concerned population is up to several hundred thousand, production cut tends to result in worker layoff. According to one grassroots insider of Jiangxi Copper Company Limited, currently copper enterprises are experiencing difficulty, despite production cost Jiangxi Copper did not resort to redundancy, if it were a private enterprise it may already have done so for the sake of survival, but state-owned enterprises show sense of responsibility in their treatment of employees.

Teng Tai said, actual industries need different treatments, for instance real estate industry is in periodical surplus, but products like copper may be in cyclic aging, such industries can only restrict production or reduce production, otherwise there is no other way out. Industries with aging of supply not only need to restrict production and enforce phase-out and transfer, they also must free up attached social resources such as land, capital and personnel factors, in order to develop into new supply, which is also important means for industry transfer. “furthermore, production surplus is comparative, interim and local supply-demand contradiction can be eliminated as resources gradually shift allocation toward new industrial sectors.”

Recently, the the State Council promulgated “Guiding Opinion on Actively Bringing out New Consumption’S Leading Role to Accelerate Cultivation and Formation of New Supply & New Momentum”, deployed consumption upgrading to guide industry upgrading, and increase new supply through system innovation, technology innovation, and product innovation, aiming to satisfy and create new consumption, and develop new momentum.

After grasping the spirit of the central government, local governments began to make deployment. The supply side reform proposed by Chongqing City mainly covers three aspects: Firstly, improve “supply restriction”, lower enterprise operation cost by lowering financing cost, reducing tax and fees, streamlining administration and delegating power etc; secondly, through “cutting capacity”, and “removing stock”, cultivate strategic emerging industries and emerging service industries etc, shift factors of production from supplying aging industries to emerging industries, update supply structure; thirdly, it is necessary to, by deepening system and mechanism reform, reduce supply restriction on free flow of factors of production, improve supply efficiency.

Currently, on the one hand China is facing capacity surplus, on the other hand there are insufficient high-end consumption products. In addition to iron and steel, and copper industry, mid to low end consumer products are in serious surplus, for instance clothing, shoes, hats, and toys cannot be absorbed by consumers; whereas the supply of high quality consumer goods is insufficient, Chinese residents are involved in shopping frenzy in overseas countries.

At the 15th China Equity Investment Annual Forum hosted by Zero2IPO Group, a number of industry insiders in the investment circle respectively offered their views on the contradiction of supply and demand. Zhao Linghuan, Chairman of Hony Capital, said China now has become a global market, with large volume and rapid growth, but when it comes to high quality products and services needed by consumers, China now has insufficient ability to supply them, the demand is brisk but capacity is inadequate, this explains why Chinese tourist groups often turn into global shopping groups in other countries. On the other hand, in the past 30 years we were busy becoming “world factory” to manufacture products for the whole world, but most products are low-cost, high-energy-cost, and high-pollution products, today they not only turn into huge stock, what’s more serious is surplus capacity, whereas absorbing capacity is a very painful process. “China is in the transition period of economy, instead of recession period, there are hot spots and cold spots, a tale of two worlds.”

At present, industry insiders widely consider that “supply side reform” has two major tasks in the fundamental sense: Firstly, free up resource factors from industries with surplus capacity and limited growth space; secondly, deliver more labor, capital, finance and technologies to “sunrise industries” that provide mid to high end consumption services.

Li Qilin, researcher of Minsheng Macro Research Institute, said when receiving interview from journalists that, in the past the core driving power of economic growth is real estate, now real estate is in downturn and all related industrial chains experienced capacity surplus, for instance iron & steel and coal belong to this category, whereas the past rapid economic development accumulated huge wealth, but public service and some manufacture industries have limited supply ability, therefore the core of future stable growth and promoting reform is here, that is to match supply with demand.

Teng Tai said supply reform holds key role for the current mission of stabilizing growth, adjusting structure, restoring economic rebound and growth momentum, the core of supply reform is to relax restraint and remove supply restraint, abandon old supply factors, develop new demand, new momentum, and new market. The current macro economy should “by way of relaxing supply restraint for new industry, and reducing suppression of new economy supply, so as to create conditions for the market to release new supply, guide new supply to create new demand, and ultimately through adjustment of economic supply and demand structure, let economy return to the ideal operation track of supply automatically creating demand, restore automatic balance mechanism for supply and demand and finally balanced status.” Teng Tai said.

Shaanxi Gold Group Signed Strategic Cooperation Agreements With Five Enterprises

Recently, Shaanxi Gold Group Inc. successfully signed strategic cooperation agreements and secondary member agency agreements with 5 related enterprises in Shaanxi including Northwest Nonferrous Metals Research Institute, Baoti Group Co., Ltd, Hanzhong Zinc Industry Co., Ltd, Shaanxi Zinc Industry Co., Ltd, and Shaanxi Feng County Sifang Gold Mine Co., Ltd, which ushered in a new stage of cooperation & winwin between all sides for seeking joint development.

All sides unfolded sincere and effective communication and exchange over agreement signing and future cooperation. All sides unanimously agreed that Shaanxi Gold Group has clear-cut development thinking approaches, and excellent operation model, the signing ofthe cooperation agreement created opportunities and built platform for strengthening communication, and seeking cooperation; everyone unanimously indicated that they would fully bring out respective advantages, earnestly implement agreement contents, continually explore cooperation methods, expand space of cooperation, jointly resist market pressure, and promote each enterprise to solve difficult problems, so as to buck the trend to acquire development.

MIIT Will Continue to Encourage Application of Aluminum in Construction Sector in the “Thirteenth Five Year” Plan of Aluminum Industry

At the Expanded Aluminum Alloy Outer Panel Application High-end Forum hosted by the China Nonferrous Metals Industry Association opened in Qingdao, Shandong. Ren Xudong, Executive Vice President of the China Nonferrous Metals Industry Association, Vice President and Secretary-general Jia Mingxing, and Vice President Wen Xianjun attended the Forum. At the forum, Wen Xianjun delivered keynote speech, relevant officials of the Department of Raw Material Industry of MIIT, and Ron Knapp, Secretary-general of the International Aluminum Institute, delivered speeches. The Forum was respectively presided over by Yang Yunbo, Deputy Secretary-general of the China Nonferrous Metals Industry Association and Director of Light Metal Department, and Meng Jie, Executive Deputy Secretary-general of the China Nonferrous Metals Industry Association Aluminum Branch.

In his speech, Wen Xianjun pointed out the positioning of construction sector as the biggest sector in the consumption of China’s aluminum products is expected to remain unchanged within at least 5 years, but the consumption percentage may decline. The reason to treat aluminum outer panel, aluminum template, and scaffold for construction use as key promotion fields is that in order to expand aluminum application, the primary target is to focus on usages of massive quantity and wide scope; secondly, from technology perspective, there is no great difficulty, it is the practice that developed countries have already started application and gained mature experience many years ago. Aluminum has solid foundation and vast development space in the application of construction sector, In the past several years, China Nonferrous Metals Industry Association has done a lot of work in this aspect, following the holding of Expanding Aluminum Alloy Construction Template Application Forum in Foshan last year, it again held a special topic activity regarding expanding aluminum application in the construction sector, aiming to promote usage of outer panel made of aluminum alloy to partially replace color steel plate. Our proposal of replacing steel with aluminum and saving wood with aluminum in the construction sector received vigorous support and active response from downstream industries, and established excellent relation with downstream enterprises. In the next step, while continually promoting aluminum application in traditional fields such as construction, it will treat light weight trend in transportation field as key breakthrough point, further build platform for expanding aluminum application, and promote transition and upgrading of the aluminum industry.

According to relevant officials of the Department of Raw Material Industry of MIIT, compared with traditional materials, aluminum outer panel enjoys the advantages of light weight, ease of processing, corrosion resistance, and better appearance, for the reason of which it has witnessed certain usage in some plant houses and large buildings in China. According to statistics of the China Nonferrous Metals Industry Association, each year China consumes about 20 million ～ 30 million tonnes of construction-use color steel plate. Based on theoretic calculation, if replaced by aluminum totally, it can consume 10 million tonnes ofaluminum products, which fully proves the significance of promoting this work. It is believed that as the competitiveness of aluminum outer panel products continue to improve, and public awareness gradually increase, aluminum outer panel will face broader application prospects, in the next step, MIIT will continue to encourage the expansion of aluminum application in the construction sector such as aluminum alloy outer panel, construction-use aluminum template in the compilation of guiding opinions for Nonferrous Metals Thirteenth Five Year development plan and the Thirteenth Five Year Development Plan for aluminum industry.

Meanwhile, MIIT attaches importance to innovation and popularization & application of aluminum processing products, actively guides and promotes application of aluminum products in automobile, railway transport, construction, and aviation fields, promotes light weight transportation, economical electricity, and high-grade construction, and regards improving aluminum product grade and expanding consumption as crucial and effective channels for diffusing surplus of electrolytic aluminum capacity.

In the Forum, Chen Yuru, Honorary Director of the China Steel Structure Association Expert Committee; Wu Yaohua, President of the Design Institute of the Building Research Institute of China Metallurgical Group; Yin Changbo, Technological Director of Guangxi South-South Aluminum Engineering Co., Ltd; Li Yongping, General Manager of Yunnan Aluminum Co., Ltd Aluminum Processing Branch; and Xiong Hui, Chief Expert of Beijing Antaike Information Development Co., Ltd; respectively delivered reports.

This Forum was co-hosted by China National Building Waterproof Association Metal Roof Branch and South-South Aluminum Co., Ltd, and co-organized by China Nonferrous Metals Industry Association Aluminum Branch and Beijing Antaike Information Development Co., Ltd.

Cenxi City Cooperated with Chinalco Guangxi Nonferrous Rare Earth Company to Develop Resources

On November 13, Wu Weihua, member of the Standing Committee of CPC Cenxi Municipal Committee and Vice Mayor, signed strategic cooperation agreement with Chinalco Guangxi Nonferrous Metals Rare Earth Company on behalf of the Municipal People’s Government, signifying that the strategic cooperation between Cenxi City and Chinalco took a crucial step forward. Vice Mayor Wu Yu presided over the signing ceremony.

It has been learned that Cenxi City is an important metallogenic area of ion-absorbed rare earth mine in Guangxi, the currently proven rare earth resource volume is 1.03 million tonnes, since 2011 Cenxi has recycled a total of 3758 tonnes of rare earth. The signing of agreement for strategic cooperation between Cenxi City and Chinalco Guangxi Nonferrous Rare Earth Company holds crucial significance for safely and eco-friendly developing rare earth, extending rare earth exploration & deep processing industrial chain, increasing rare earth added value, and further promoting sustained and healthy economic and social development in Cenxi City.

Guangxi Vigorously Builds Eco-Friendly Aluminum Industry

On December 17, the Press Conference for Second Startup of Guangxi Aluminum Industry was held in Nanning. The Industry and Information Technology Commission of the Autonomous Region reported information related to second startup of Guangxi aluminum industry at the Press Conference, and put forward that by 2025 80% of aluminum oxide manufactured in Guangxi will undergo electrolysis and deep processing within the Region, total output value of the wholeRegion’s aluminum industry will reach 200 billion yuan, aluminum oxide output will reach 12 million tonnes.

“Currently electrolytic aluminum enterprises in our region is facing difficulty in production, aluminum oxide, electrolytic aluminum and aluminum product processing steps in the industrial chain have ill-matched capacity, it mainly depends on selling primary product aluminum oxide products and aluminum processing products with low added value to acquire modest profit.” According to the spokesperson of the Industry and Information Technology Commission of the Autonomous Region, it is imperative to change the passive situation in which Guangxi mainly relies on selling primary raw materials and processing products with low added value, convert resource advantage to economic advantage, propel aluminum industry to change methods and adjust structure, carry out industry transition and upgrading, the task to implement aluminum industry “second startup” is very urgent.

It has been learned that up till now Guangxi has initially developed relatively complete aluminum industrial chain, but electrolytic aluminum is a weak link in the industrial chain, its capacity and inadequate production become bottleneck in restricting the development of Guangxi aluminum industry.

The meeting briefly introduced the “Mid to long Term Plan for Second Startup of Guangxi Aluminum Industry”, which departed from further improving the initially formed ecofriendly aluminum industrial chain, in the aspect of steadily developing bauxite and aluminum oxide, appropriately developing electrolytic aluminum, vigorously developing aluminum precision and deep processing and aluminum alloy, speeding up developing integrated utilization of red mud, plan and deploy a batch of aluminum industry construction projects in Baise, Laibin, Nanning, Liuzhou, Guigang, Hezhou, Wuzhou, Fangchenggang, Hechi etc, and develop industrial cluster.

The overall target of Guangxi aluminum industry’s second startup is: By 2025, total output value of the whole region’s aluminum industry will reach 200 billion yuan, industrial added value will reach 72 billion yuan; strive to ensure 80% of aluminum oxide produced in Guangxi to undergo electrolysis within the region, 80% of electrolytic aluminum produced in Guangxi to undergo deep processing within the region; aluminum oxide output will reach 12 million tonnes, electrolytic aluminum output will reach 4.80 million tonnes, recycled aluminum output will reach 1 million tonnes, output of aluminum processing products will reach 5 million tonnes; aluminum processing products will cover multiple fields including transportation, aviation and space, electronic and electrical appliance, construction, electricity, and packaging, in which precision and deep processing products will account for more than half of total products.

CSCEC and Chinalco Joined Hands to Invest 5 Billion Yuan for Making Deployment in Building New Materials

CSCEC-Chinalco New Material Co., Ltd, a company jointly invested by China State Construction Engineering Corporation (CSCEC) and Chinalco, was inaugurated in Chengdu, Sichuan, on December 15, CSCECChinalco will invest nearly 5 billion yuan capital in the next five years to make deployment in the building new materials market, up till now Chengdu factory has entered substantial construction stage, regional companies in Guangdong, Hubei, Liaoning, and Fujian are under fast-paced preparation.

As labor prices climb and the market requirements for building quality improve, due to low technological content and construction efficiency, waste of labor, and heavy pollutionproblems, currently traditional building materials such as wood-bamboo composite plywood and steel template that are widely used in China can no longer meet the requirements of green architecture and energy saving & emission reduction, this provides development opportunities for renewable aluminum alloy template that conforms to ecofriendliness and circular economy requirements.

In 2014, the usage rate of China’s aluminum template market is about 7.5%, according to which there can be saving of 73 million sqm wood template, 182,500 tonnes of standard coal, plus 448,000 tonnes of carbon dioxide emission reduction. As the pace of urbanization quickens, aluminum-based building new material will have bigger space of application. As a matter of fact, in the compilation of‘“Thirteenth Five Year” Development Plan of Nonferrous Metals Industry’, the MIIT encouraged expansion of using aluminum construction template.

As the world’s biggest construction and real estate integrated enterprise group, CSCEC boasts a complete industrial chain of construction products ranging from product technology R&D, to prospecting design, engineering contracting, real estate development, equipment manufacture, and property management. Whereas Chinalco, a key global supplier of nonferrous metals, boasts high-end technology advantage, industrial advantage, and resource advantage in R&D and processing fields of aluminum resources and products. The cooperation between both sides in aluminum construction new material field can both bring out Chinalco’s strength in material, technology and process, and leverage CSCEC’s advantages in market development and project management, so as to fulfill union of great powers, mutual benefit and win-win.

According to relevant chief persons of CSCECChinalco, CSCEC-Chinalco will constantly upgrade aluminum-based building materials for recycling use such as aluminum alloy model frame system, further develop aluminum alloy scaffold, aluminum alloy container house, and progressively develop and manufacture other new building materials like compound materials, and high polymer materials. In market aspect, CSCEC-Chinalco will contribute investment to set up subsidiaries across China by joining force with local stateowned asset investment companies and large construction enterprises to make deployment and industrial promotion, and will take advantage of CSCEC’s overseas market to serve overseas construction projects.

The Ministry of Land and Resources Standardized Approval Management of Exploration Right & Mining Right for Rare Earth & Tungsten Mines

Recently, the Ministry of Land and Resources issued “Notice on Standardizing Approval Management of Exploration Right & Mining Right for Rare Earth Mine & Tungsten Mine”(the “Notice”). Rare earth ore and tungsten ore are specific ore varieties prescribed by the State Council for protective exploitation. Since the implementation of total exploitation volume control, rare earth mine and tungsten mine resources received effective protection and rational utilization. This time, the move by the Ministry of Land and Resources to issue “Notice on Standardizing Approval Management of Exploration Right & Mining Right for Rare Earth Mine & Tungsten Mine”is for further standardizing and strengthening prospecting and exploitation approval management, and under the framework of national mineral resource laws & regulations and relevant rules of the State Council, the Ministry of Land and Resources studied and formulated the “Notice on Standardizing Approval Management of Exploration Right & Mining Right for Rare Earth Mine & Tungsten Mine” before issuance. This notice shall be executed as of the date of its promulgation,with a valid period of 3 years. “The Notice of The Ministry of Land and Resources on Issuing Total Volume Control Index of Rare Earth Mine & Tungsten Mine Exploitation for 2014”(GTZF [2014] No. 65) will be suspended from execution.

The Notice required to, according to mineral resource laws & regulations and relevant rules of the State Council, firstly, continue to suspend acceptance of registration applications for new rare earth mine prospecting, rare earth mine & tungsten mine exploitation (including expansion of mining zone scope). Secondly, when applying for transfer registration of exploration right & mining right of rare earth mine, the transferee should have entity qualification as large rare earth enterprise group identified by the state government. Thirdly, when applying for renewal registration of rare earth mine & tungsten mine mining rights, it is required to satisfy requirements on total exploitation volume. Fourthly, when involving exploitation of co-existing & associated resources, it is required to incorporate the exploitation of rare earth mine and tungsten mine into total control quota management, the part exceeding the exploitation quota must be put aside as reserve, and cannot be sold. If there is no storage condition or there is inadequate storage ability, it is not allowed to apply for expansion of mining zone or expansion of production capacity. Fifthly, for ion-type rare earth deposit, implement management according to relevant articles on Category 2 ore in the “Notice on Further Standardizing Management of Mining Right Transfer” (GTZF [2006] No. 12). Sixthly, if rare earth mine & tungsten mine exploration rights cannot fulfill transfer of exploration right to mining right due to policy restriction, after completing general prospecting or necessary general exploration, it is required to handle verification registration, it is allowed to apply for exploration right retention according to rules. Seventhly, in case of recycling and reusing rare earth resources when implementing project construction projects, it is required to compile management method, the provincial (regional) land and resources competent departments should continue to organize recycling & reuse or reserve, incorporate into total exploitation control quota and strictly implement standard management and supervision.

It is worth noting that, in the applications of new rare earth mine prospecting, and rare earth mine & tungsten mine exploitation registration (including expanding mining zone scope) subject to continued suspension of acceptance as required by the Notice, the following cases are exempted: Firstly, rare earth mine reconnaissance, general prospecting or necessary general exploration projects by fully using Central Geological Prospecting Fund or provincial level financial exclusive fund, which should lodge application with the Ministry of Land and Resources by presenting issued budget document, after project completion it is required to handle verification registration before revoking exploration right, enforce management as proven orefield with funding from state government for prospecting. Secondly, rare earth mine prospecting projects set up for the sake of keeping exploitation & reserve balance, with entity qualification as large rare earth enterprise group identified by the state government. Thirdly, application of newly setting up mining rights for rare earth mine & tungsten mine, which must satisfy total exploitation volume control, and capacity balance requirements, with total exploitation volume control quota and not exceeding quota limit. Wherein, the mining right applicant for rare earth mine should have entity qualification as large rare earth enterprise group identified by the state government.

The 100,000 t/a Copper Project of Qinghai Copper Industry Co., Ltd Landed in Xining

Qinghai Copper’s 100,000 t/a copper cathode project landed in Xining Ganhetan Industrial Park, which filled a void of copper smelting in Qinghai Tibet region, the project is scheduledto be completed and launched into production in July 2017.

With a construction size of 100,000 t/a copper cathode, this project has annual output of 440,000 tonnes sulfuric acid and precious metals such as gold, silver, platinum, palladium and selenium, the project involved total investment of more than 2.41 million yuan, after completion it is estimated to bring annual sales income of 6 billion yuan, and provide nearly 1000 jobs.

In order to implement Qinghai “Eco-province”strategy, Qinghai Copper selected advanced applicable process and equipment. The project adopts China’s independently developed oxygen enriched bottom blowing smelting —bottom blowing continuous smelting technology, this process features strong raw material adaptability, capable of maximizing integrated recycling and reuse of resources, it fully utilizes sulfur in the raw material to accomplish total pyretic smelting, with no need of coal allocation, which saves energy, and fulfills low carbon smelting; meanwhile the system is totally closed, with little leakage of harmful smoke, which accomplishes clean production, and solves the world-class difficulty of low-altitude pollution caused by traditional smelting process, with advantages of simple operation and maintenance, low operation cost, and environmental friendliness. For this project, on December 9, China Enfi Engineering Corporation and Qinghai Copper Industry Co., Ltd held contract-signing ceremony for general contracting of 100,000 t/a copper cathode project smelting zone at the Western Mining Group Corporation.

The completion of the project holds positive meaning for speeding up development of copper resource in Qinghai-Tibet region, filling a void of copper smelting in Qinghai Tibet region, and hitting Qinghai’s “Thirteenth Five Year Plan” strategic target. In particular, Qinghai is making preparations to build 100 billion lithium battery industry, this project will provide vast development space for copper cathode and copper foil industry in the industrial chain. The project is scheduled to be completed and launched into production in July 2017.

China’s Aluminum Consumption is Expected to Reach Peak at the End of the “Thirteenth Five Year Plan”

At the end of the “‘Thirteenth Five Year Plan’or at the beginning of the ‘Fourteenth Five Year Plan’, it is expected the peak of China’s aluminum consumption will reach 44,000,000 t/a, in other words there is still 10 million tonnes above growth space, and it will stay at the peak level for a very long period of time.”Wen Xianjun, Vice President of China Nonferrous Metals Industry Association, expressed the view recently when attending Bulk Commodity Market Summit Forum.

Wen Xianjun said January～October data of China’s aluminum industry were satisfactory, but after October the situation quickly deteriorated, aluminum price fell sharply. The main reasons are: Decreasing cost, anticipation of supply surplus, and anticipation of falling consumption growth.

Judging from industry cost, in November 2015, the average total cost of China’s electrolytic aluminum is 12300 yuan/tonne, down by 10% than that at the beginning of the year, average cash cost is 11360 yuan/tonne, down by 12% than that at the beginning of the year, but in November the 3-month term aluminum average price at the Shanghai Futures Exchange is 10418 yuan/tonne, down by 19% than that at the beginning of the year. “The margin of price drop is far higher than that of cost drop.” Wen Xianjun said.

In terms of supply, Wen Xianjun considered that there is indeed surplus in supply, which is the result of fast growing investment in the previous several years, and collective release ofproject completion. The gloomy market also forced electrolytic aluminum enterprises to begin gathering together for warmth and production cut for self rescue, and they one after another implemented flexible production. According to Wen Xianjun, in 2015, electrolytic aluminum capacity being cut will reach around 4.91 million t/a, before aluminum price returns to reasonable range, this part of production capacity will not be re-launched temporarily.

In the aspect of consumption, Wen Xianjun said despite declining growth in traditional consumption fields, due to relatively high base number, it would continue growth to certain degree, and new consumption growth points would continue to emerge, lightweight trend of commercial vehicles, construction template, aluminum alloy pedestrian overpass, and aluminum alloy protection panel all displayed robust growth, it is expected in 2015 primary aluminum consumption volume is 30.60 million tonnes, up by 9% on Y-o-Y basis, it is expected in 2016 primary aluminum consumption is 32.80 million tonnes, up by 7.2%.

Out of optimism toward consumption, Wen Xianjun estimated that during the entire “Thirteenth Five Year Plan” period, aluminum consumption will maintain 7%～8% growth, it is expected there will be an increase of 10 million tonnes of primary aluminum consumption. He said, judging from output, consumption, and investment, the fast growth period of China’s aluminum industry has already passed or will soon pass, the “Thirteenth Five Year Plan” will be a key period for the aluminum industry to evolve from volume expansion to quality improvement.

Refined Copper Production by Province or City in 2015

Tin Production by Province or City in 2015

Aluminium Production by Province or City in 2015

Alumina Production by Province in 2015

Lead Production by Province or City in 2015

Magnesium Production by Province in 2015

Nickel Production by Province or City in 2015

Production of the Ten Major Nonferrous Metals in 2015

Fabricated Copper Production by Province or City in 2015

China’s Major Non-ferrous Metals Imports & Exports (End of November. 2015)

Continued from the previous page

Zinc Production by Province in 2015

Although efforts have been made to verify the reliability of all information in this publication, China Nonferrous Metals Monthly cannot guarantee the accuracy, adequacy or results obtained from the use of such information.

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