The utilization rate of electrolytic aluminum production capacity is only 70%

Compared with the increasing production of electrolytic aluminum year by year, the production capacity of electrolytic aluminum is expanding more rapidly. Statistical data shows that China's electrolytic aluminum production capacity has increased from 11.06 million tons in 2006 to 18 million tons in 2008, an increase of 63%. However, since the government announced in 2009 that it would no longer approve the construction, renovation, and expansion of electrolytic aluminum projects, the production capacity of electrolytic aluminum continued to grow by about 10% year-on-year. By the end of 2011, the production capacity had reached 25 million tons, with an actual output of 1750, but the utilization rate of production capacity was only about 70%. The insufficient utilization rate of production capacity indicates that the production capacity of electrolytic aluminum has always been surplus.

In fact, the controversy over overcapacity has been accompanying the electrolytic aluminum industry in recent years. Although the government has continuously increased the task of phasing out outdated production capacity for electrolytic aluminum, its impact on the actual production capacity of domestic electrolytic aluminum is limited, and phasing out outdated production capacity has not hindered the continued rapid development of total production capacity. From the perspective of the supply and demand relationship of electrolytic aluminum in China in recent years, whether before or after the 2008 financial crisis, there has always been a hidden concern of overcapacity in the Chinese electrolytic aluminum industry. If all proposed projects are completed and put into operation, by the end of the 12th Five Year Plan, the national electrolytic aluminum production capacity may exceed 30 million tons, and the contradiction of overcapacity will further intensify.

Although many industries in China have experienced overcapacity and industry losses since the beginning of this year, the losses in the electrolytic aluminum industry have become more prominent compared to last year, with the industry's loss area exceeding 30%. The reasons for the losses are, on the one hand, related to high electricity prices, and on the other hand, related to overcapacity in the electrolytic aluminum industry. But the western region is rich in resources and is becoming a new hot spot for investment in electrolytic aluminum, with many large financial groups going to the western region to invest. According to analysts' estimates, the production capacity of electrolytic aluminum will continue to grow in 2012, perhaps reaching around 27 million tons. In 2013, the production capacity of electrolytic aluminum was about 30 million tons, but the utilization rate of production capacity will still be maintained at around 72% -75%. Due to overcapacity or an increase in the possibility of future aluminum prices falling, the profits of electrolytic aluminum enterprises will further shrink.