Alumina Sector Turns from Losses to Profits
Year:2017 ISSUE:2
COLUMN:INORGANICS
Click:360    DateTime:Mar.20,2017
Alumina Sector Turns from Losses to Profits

At the end of 2015, Chinese alumina producers, in concert, reduced their combined capacity by nearly 7.00 million t/a. Alumina spot goods shifted from oversupply to a shortage, directly driving up alumina prices. More than 60% of producers have turned from losses to profits.
Also, 14 electrolytic aluminum enterprises – China Aluminum Corporation Limited, State Power Investment Corporation, Weiqiao Aluminum & Electricity Co., Ltd., Xinfa Aluminum & Electricity Group, Nanshan Group, East Hope Group, Jinjiang Group, Tianshan Aluminum Co., Ltd., Yunnan Aluminum Group Co., Ltd., Shenhuo Group Co., Ltd., Zhongfu Industrial Co., Ltd., Yidian Group Co., Ltd., Qinghai Investment Group Co., Ltd. and Dongxing Aluminum Co., Ltd. – simultaneously announced a joint reduction of production rates.
The price of alumina spot goods in China at the end of January 2016 was nearly RMB1 200/t (40.5%) lower than at the same time of last year. The price of alumina spot goods at the beginning of November 2016, however, was over RMB1 000/t (61.3%) higher than at the beginning of this year, being 29% higher than at the same time of last year.
China imported 2.17 million tons of alumina during January-September 2016, a drop of 30.9% from the same period of 2015. The volume during April-August was 787.5 kt, a drop of 56.99% from the same period of 2015.
Demand for bauxite in China has been rising overall in recent years, and the average annual import volume is nearly 50.00 million tons. The import volume during January-September 2016 already exceeded the total year’s import volume in 2014. Geographically, Shandong has been the hotspot for the demand for imported bauxite. Today the annual demand for bauxite in Shandong is 46.00 million tons.
Concentration of the alumina sector is constantly increasing. Reform to the institutional system of state-owned enterprises has led to M&As and accelerated the integrated development of the sector. For instance, the alumina business units of Shanxi Tongde Aluminum Co., Ltd. and Shanxi Zhaofeng Aluminum Co., Ltd. were acquired by Xinfa Aluminum & Electricity Group. Henan Sanmenxia Yixiang Aluminum Co., Ltd. was entrusted to Jinjiang Group. Lubei Group and Jinjiang Group are to merge, and Lubei Chemical Co., Ltd. will likely be run by Jinjiang Group.
Globally, the aluminum sector has been slack for some time, but its development prospects are still quite promising. The use of aluminum to replace copper in electric wires/cables, the use of aluminum to replace steel in automobile materials and the development and application of new aluminum products can strongly promote consumption of aluminum and, in turn, back the development of the electrolytic aluminum sector.