Market Analysis: A new round of reshuffle is difficult for the aluminum market outside the strong and weak

2011 is the first year of China's "Twelfth Five-Year Plan". In order to allow non-ferrous metals companies to have an in-depth understanding of the implementation steps of the national "Twelfth Five-Year Plan," we will accurately analyze the economic environment, industry development trends, and investments that companies have in 2011. Focus and other issues, from April 15 to 20, the 7th (2011) China Nonferrous Metals Industry Chain Development Forum sponsored by China Nonferrous Metals Industry Association and China Investment Association and organized by Beijing Komodi Investment Consulting Co., Ltd. was held in Beijing. The forum conducted a comprehensive interpretation of the recent series of policies introduced by the country and provided an important reference for enterprises to make decisions on investment and production operations.

A new round of reshuffle is difficult for the aluminum market outside the strong and weak

On April 20, the website of the Ministry of Industry and Information Technology formally announced the “Emergency Notice on Containing Overcapacity and Repeated Construction in the Electrolytic Aluminum Industry and Leading the Healthy Development of the Industry” jointly issued by 9 departments. The official announcement of the announcement coincided with the Aluminum Industry Chain Forum. The new round of electrolytic aluminum shuffling did not make the participants feel optimistic. Everyone thought that in 2005 the National Development and Reform Commission had issued strict control over electrolytic aluminum production capacity excess documents, and was quite unsure about the implementation of this policy.

Liang Lijuan, an analyst of COFCO's Industrial Products Division, believes that currently, 3 million tons of production capacity under construction is generally not within the scope of the restrictions. These capacities are mainly concentrated in Xinjiang, Qinghai, and Inner Mongolia. It is expected that half of the 3 million tons of capacity under construction will begin to operate this year. If the price rises significantly, the opening of new production capacity will put pressure on prices.

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Affected by the upward trend of energy prices and food prices, the US CPI began to show signs of gradually increasing. The Fed’s monetary policy is fixed on the CPI. Therefore, CPI will have a greater impact on the Fed's next-step policy. US Treasury yields have shown signs of higher prices in recent weeks, suggesting that the bond market is expecting the Federal Reserve to end its quantitative easing policy earlier. Under the background that all major economies in the world have raised interest rates one after another, the time for the United States to raise interest rates was earlier than the market had previously expected.

From the current data in China, the growth rate of industrial added value and fixed asset investment have both declined. On January 26 this year, the “State of the Eight Most Severe” policy was introduced. It requires that “in cities, cities with separate plans, capital cities in the provincial capital, and cities with excessively high house prices and rapid growth, they must be strict in a certain period of time. Formulate and implement housing restriction measures." Zhang Hanya, president of the China Investment Association, believes that if real estate developers start construction of a large number of commercial housing markets in 2009 and 2010, it will be difficult to sell, which will affect the developer’s fund recovery and enthusiasm for new projects. The low growth or decline in real estate investment, which accounts for about 20% of total social investment, will affect the growth of investment in the entire society.

Liang Lijuan stated that the target value of GDP for the whole year of 2011 is about 8%, and the target for GDP during the “12th Five-Year Plan” period is 7%. The speed requirement for development in China has been greatly reduced. The rapid slowdown in GDP growth shows that our country has attached importance to adjusting the economic structure. After a definite drop in CPI, austerity measures will end. At that time, China’s economy may assume a middle-low and high-end pattern.

Supply and demand surface

In the year of 2010, the output of electrolytic aluminum reached 15.52 million tons, an increase of 20% from the year-ago period in 2009. In January of this year, the output of electrolytic aluminum was 1.298 million tons. In February, it was 1.305 million tons, and the output rose again. Some analysts believe that the year-on-year growth of production in 2011 may have declined.