Industrial Structure Optimization Of Non-Ferrous Metal Rose To The Challenges



Industrial Structure Optimization Of Non-Ferrous Metal Rose To The Challenges

Non-ferrous metal industry is one of the pivotal industries in manufacturing and an important supporting force in developing into a manufacturing power. In particular, it is closed related to agricultural modernization, industrial modernization, national defense modernization and science and technology modernization.

Over the past years, China’s non-ferrous industry has been actively following the concept of changing method, adjusting structure and promoting transformation. The entire industry has been striving ahead and making great efforts to make the big industry even stronger. The industry has made steady progresses in gross scale, industrial structure, technology innovation, green development and international influences, thus laying a solid foundation and accumulating rich experience for developing into a strong non-ferrous metal country.

Currently, China boasts improved non-ferrous metal industry system, huge market scale, rich human resource and significant comprehensive advantages. Now we truly are a big industry country and are fully competent for further development featuring higher quality, higher efficiency and greater significance.

Steady improvement of overall gross scale

Non-ferrous metal is the basic material for economic and social development as well as the strategic material for national defense military field and new technology reform. Human society is in great need of non-ferrous metal. Since the 18th CPC national congress, our non-ferrous metal industry has made steady improvement in gross scale and industrial influence so as to realize the dream of developing into a strong non-ferrous metal country.

One aspect is the continuous increase in gross scale. From 2013 to 2017, ten types of non-ferrous metals in our country grew from 41.54 million tons to 55.01 million tons in yield. The scale extends at an appropriate speed to adapt to the requirement of economic new normal. The second aspect is non-ferrous metal is gradually becoming more and more important in national economy. Our independently-developed non-ferrous new materials effectively support the development of strategic emerging industries and national defense technologies, thus making huge contributions to aerospace, high-speed train, ocean development and nuclear power project. Non-ferrous metal has become a vital driving force for the implementation of national advocates and strategies including “OBOR”, Yangtze River Economic Zone, development of western regions, Beijing-Tianjin-Hebei integration, and for the development of local economy. The third aspect is our non-ferrous industry is becoming more and more predominant internationally. In 2016, our principal non-ferrous metals like copper, aluminum, lead and zinc respectively occupied 35.9%, 55.4%, 42.0% and 45.9% in the world. Among global top 10 smelting enterprises for copper, aluminum, lead and zinc, China has a presence in each of the four fields with at least 3 Chinese companies.

Due to the influence of international and domestic economic pattern, China’s non-ferrous market has been suffering weak demands and some deep-rooted problems have been further highlighted such as structural overcapacity in non-ferrous industry and market imbalance. 18th CPC national congress brought up the concept of deepening supply-side structural reform of non-ferrous industry so application expansion has made great progress.

Adopting the rule of “dredging and blocking”, to make efforts to promote supply-side structural reform. While eliminating backward capacity and withdrawing uncompetitive capacity, to vigorously expand non-ferrous metal application. Industrial consensus was reached. Step one is to take the settlement of electrolytic aluminum overcapacity as an opportunity and take aluminum product application expanding as entry point to increase effective supply. Great efforts have been made in expanding aluminum application such as “replacing steel by using aluminum, replacing copper by using aluminum, replacing wood by using aluminum”. Lightweight transportation field has raised significantly increased demands for aluminum materials; aluminum building plate market has seen explosive growth; aluminum furniture has been gradually gaining wide recognition from the society and families.

All these give a great impetus to the development of aluminum industry. Step two is to accelerate the application expansion of non-ferrous metal new materials. Driven by national policies, our country has been continuously expanding the application of automobile power battery material, photovoltaic cell material and rare earth permanent magnet and so on. For some non-ferrous metals, supply falls short demands and for some non-ferrous metals, their applications in China outperform many other countries. Step three is to make long-term plans. In order to develop potential market and strengthen high-end product R&D for non-ferrous metals, many products such as auto-oriented aluminum plate, marine-oriented titanium product, 3D printing material and new-type dual-use product have stepped into small-scale industrial application, which indicates the broad prospect of non-ferrous application market.

2013-2017 saw some fluctuations in total profit of non-ferrous industry in China. In 2015, total profit of our non-ferrous industry decreased by the rate of 9.5% while that in 2016 increased by the rate of 44.4%, which made it become the biggest rate for recent 5 years.

Continuous optimization of industrial structure

Our country has been continuously optimizing structure of non-ferrous industry and improving technology innovation ability.

Firstly, upgrading of product mix. During that period, copper material and aluminum material enjoyed annual increase of 15.5% and 20.1%, far higher than the increase rate of other smelting products yield in the same time. In this industry, the profit yielded by fine and deep processing significantly increased from 50% in 2013 to over 60% in 2017.

Secondly, optimization of regional structure.

Non-ferrous smelting deployment tended to concentrate in resource intensive regions and convenient transportation regions; non-ferrous processing deployment tended to concentrate in consumption intensive regions. A batch of characterized new-type industrial bases rose and capacity concentration was even more emphasized. A batch of uncompetitive capacity withdrew swiftly and electrolytic aluminum capacity replacement job was effectively implemented.

Thirdly, enhanced resource guarantee strengths. Taking national policy of mine exploring as guidance, we strengthened geological prospecting efforts and discovered a batch of large ore deposits so national resource reserves was thus guaranteed. Meanwhile, huge advancements have been made in oversea resource development, which indicates a stable oversea resource supplying. Fourthly, highlight of key breakthroughs and constant rising of new formats and new models. Independently-developed key smelting technologies are internationally advanced; processing equipment level has been enhanced in an overall way; new breakthroughs have been made in fine and deep processing technologies and products in the fields of high-performance electronic cooper strip and foil, aviation aluminum lithium alloy, large-section aluminum alloy profile and so on. Innovative products including aluminum-air battery and nano-ceramic aluminum have successfully realized industrial application.

In 2015, the harshest-ever new 2018 Environmental Protection Act was officially put into use. Ministry of Environmental Protection and National Development and Reform Commission co-released 2017 Proposal on Prevention and Control of Air Pollution in Beijing-Tianjin-Hebei Region and Surrounding Areas and Announcement of Implementing Special Emission Limits for Air Pollutants in Beijing-Tianjin-Hebei Region and Surrounding Areas (exposure draft). Central environmental supervision was significantly enhanced. 31 provinces are covered to promote local governments to implement environmental protection rules. Since then, a series of laws, regulations and policies like environment tax law have raised even stricter requirements for the environment governance and green development of our non-ferrous industry.

Energy-saving and emission reduction effect is remarkable in non-ferrous industry in China; green development pattern has taken initial shape. Firstly, continuous deepened construction of green mines, urban mines and regional mines.

Among 661 selected national-level green mines nationwide, 114 are non-ferrous mining enterprises, accounting for 17%. “Three rates” of mines are significantly increased; waste non-ferrous metal recycling has made new progress; regional mines successfully adopted new model of “intensive utilization of natural resources”. Secondly, new progress has been made in energy saving, emission reduction and consumption reduction. During that period, comprehensive copper smelting consumption decreased by 33.9%; aluminum ingot integrated AC power consumption decreased averagely by 112 kwh/ton; comprehensive lead smelting consumption decreased by 8.25%; comprehensive electrolytic zinc consumption decreased by 5.5%. All the aforesaid aspects are internationally advanced. Thirdly, new heights have been reached in recycling economy. Some big-scale secondary metal production bases took shape in Pearl River Delta and Yangtze River Delta areas. For inland areas, they relied on traditional waste metal distributing centers to further and steadily expand scale. In 2017, secondary metal yield in China was 13.75 million tons, with YOY growth of 10.44%. Among them, secondary copper was 3.2 million tons, YOY growth of 6.7%; secondary aluminum was 6.9 million tons, YOY growth of 9.5%; secondary lead was 2.05 million tons, YOY growth of 24.2%; secondary zinc was 1.6 million tons, YOY growth of 6.7%.

Continuous improvement in opening up economy to the outside world

The great achievements of our non-ferrous industry were hard-earned in spite of unfavorable global economy, domestic economic new normal and severe downward pressure. However, we need to get fully aware of the difficulties and challenges that are facing us.

For instance, the problem of investment decreasing. The entire industry is suffering negative-growth investment now while it enjoyed double-digit growth that far surpassed national level. In particular, private investment that occupied 80% in non-ferrous industry reflected dramatic decrease, indicating less confidence in prospect and restricting steady development of industry. For instance, “de-capacity” is imposed with various challenges. We are doing a good job cleaning up illegal capacity of electrolytic aluminum and promoting supply-side structural reform but meanwhile, we are facing some challenges such as: is the price rebounding under policy anticipation going to accelerate the launching of uncompetitive capacity to the market and accelerate capacity resurgence; strong capital force may lead to significant price volatility within a short time. For instance, trade friction is getting severe. In non-ferrous industry, aluminum product is the most frequently investigated field as for “double-anti” (anti-dumping and anti-subsidy). In recent years, trade frictions involving our aluminum products are getting severe. USA has successively initiated investigations to our aluminum industry, “332” and “232”, and “301” that aims at IPR. This has yielded huge influence to China’s non-ferrous industry.

China has been strengthening its global cooperation in non-ferrous industry and improving its opening up to the outside world. Firstly, “going global” in big strides. Non-ferrous Metal International Capacity Cooperation Enterprise Alliance has been set up to promote “going global” of mines, smelting and processing. Aspects include resource cooperation, park construction, equipment cooperation, technology cooperation and project contracting. Secondly, high-level introduction. A batch of state-owned enterprises, private enterprises and joint venture enterprises have improved their introduction solutions.

Beside capital, technologies, equipment, we also introduced talents and R&D teams and other quality production factors, thus significantly improving introduction level. Thirdly, speaking right strengthening. Shanghai copper futures has gradually freed itself from the subordinate position of shadow market. Just like LME, Shanghai copper futures is now becoming the most influential pricing reference, with stronger speaking right for pricing of dominant rare metals like rare earth, tungsten, tin, antimony and indium.

During the “13th Five-Year Plan”, non-ferrous demands in China has been making steady progress. Based on 13th Five-Year Plan of Non-ferrous Industry, yield of ten types of non-ferrous metals in China should be maintained at about 46 million tons and average annual increase rate of 8%. Among them, the yield of refined copper, electrolytic aluminum, lead and zinc is respectively maintained at 6.5 million tons, 24 million tons, 5.5 million tons and 7.2 million tons, with average annual increase rate of 7.3%, 8.8%, 5.2% and 6.9%.

Overall speaking, China’s non-ferrous industry has a problem of excessive capacity growth while market demands are relatively limited so the industry is experiencing a stagflation. In order to facilitate sound development of the industry, on June, 16, 2016, General Office of the State Council released Guidance on Building a Favorable Market Environment for Structure Adjustment, Transformation Promotion and Effectiveness Increase in Non-ferrous Industry, requiring that we should well address deep-rooted long-standing problems of structural overcapacity and market imbalance in non-ferrous industry. Based on that, we should optimize stock, guide increase and initiate reduction to solve structural overcapacity, promote technology progress, expand application market, enhance international capacity cooperation, build favorable business environment.

Finally, to realize structure adjustment, transformation promotion and effectiveness icrease in non-ferrous industry. Under favorable environment of market demand expansion and supportive national policies, China enjoys a splendid prospect in non-ferrous metal industry.