MIIT: Strict Control On Newly-Added Aluminum Capacity Will Continue In 2019



MIIT: Strict Control On Newly-Added Aluminum Capacity Will Continue In 2019

Vice Minister of The Information Office of the State Council of MIIT, Mr. Xin Guobin pointed out in a press conference on January, 16th, MIIT will concentrate efforts to promote optimization and upgrading of traditional industry and consolidate de-capacity achievements. MIIT will continue to support steel de-capacity initiatives in key provinces and continuously optimize steel industry deployment. Meanwhile, to forbid the capacity expansion of new projects of steel, concrete and sheet glass and strictly control newly-added capacity of aluminum; to further boost technology reform and equipment upgrading of manufacturing industry. To release orientation plans for technology reform and upgrading through strengthening policy guidance; to enhance the cooperation with financial institutions including commercial banks to give play to multi-level capital markets; to improve technical service platforms including testing, verification and small-scale testing maturation, supporting enterprises in technical upgrading. According to Xin Guobin, the Central Economic Working Conference held recently prioritized “to promote high-quality development of manufacturing industry” among all 2019 seven important tasks, which indicates new strategic position of “building a manufacturing power”. Industrial and information systems will eagerly implement the decisions and deployment by central government and accelerate the implementation of all jobs.

The key working points of MIIT indicates that the government is paying more attention to future high-quality development of aluminum industry. Meanwhile, newly-added capacity for aluminum is still an eye-catching sector in aluminum industry.

According to information, the effect of supply-side structural reform in our country was fully embodied in 2018. Illegal capacity that had not been shut down was all shut down now. A batch of newly-built and planned projects have slowed due to index restrictions so aluminum capacity have been brought under control from its fast expansion. Acting out of normal behavior of fast ascending, supply end decreased for the first time for the past 10 years. According to statistics, China shut down aluminum capacity of 2.5 million tons in 2018, wherein, yield reduction in H1 accounted for 5% and that in H2 accounted for 95%. Q4 was the highlighted season for yield reduction, nearly 1.6 million tons/year.

According to statistics, as of the end of 2018, aluminum capacity that had been built in China was 40.51 million tons/year (illegal capacity excluded), so capacity ceiling has been taking shape. From the perspective of capacity distribution, Shandong and Xinjiang were still two main aluminum capacity regions, whose total capacity accounting for 37% of all; Inner Mongolia retained its position in the third place and its capacity was on the rise. The capacity built by the end of 2018 achieved 5.12 million tons/year. Clean-energy-rich areas led by Yunnan Province will be major resource for future capacity and traditional aluminum production bases led by Henan are falling into disfavor. In addition, it is estimated that our primary aluminum consumption will reach 37.13 million tons, up by 4.9% over the previous year, falling by 3 percent points in growth rate.

Therefore, in 2019, domestic aluminum consumption will not give a significant increase in short period and domestic market will transform from short supply to balanced supply and demand; to strictly control newly-added capacity and restrain overcapacity and promote sound development of the industry are three indispensable factors for aluminum industry to grow from high-production-volume status to high-quality status.