The prospect of electrolytic aluminum industry is worrying

It is understood that the trend of electrolytic aluminum has been increasingly intensifying, especially for the domestic leading electrolytic aluminum industry in China, "Western Jin" may become the only hope for the survival of electrolytic aluminum companies. In 2012, although Henan Province still ranks first in domestic electrolytic aluminum production, and the output of 3.78 million tons accounts for 18% of the national total, it has fallen by 7.72% from the previous year. Not only that, there are only 8 remaining companies currently in production, and they are basically at a loss.

Contrary to the situation of the decline in Henan's output, the output of electrolytic aluminum in the northwest region increased significantly. According to the data, Xinjiang produced 1.1 million tons of primary aluminum in 2012, a year-on-year increase of 274%; Gansu produced 1.89 million tons, a year-on-year increase of 65.6%; Ningxia, Inner Mongolia and Qinghai produced 22.4%, 14.6%, and 13.2% respectively.

From this we can see that the production of electrolytic aluminum has clearly shifted to the northwest region of China. The reason is simple: the electrolytic aluminum industry regards it as the price of electricity for life.

With regard to the Wucaiwan mining area integrated with this mining right, coal reserves are abundant and prices are very low. Informed sources disclosed that the local coal price was only around 170 yuan, even if it was based on the pit price of the mine, which had a slightly higher local cost, and it did not reach 50% of the coal price in the central region.

The low price of coal determines the price of electricity is not high. Taking the existing electrolytic aluminum project in Xinjiang as an example, the cost of using grid power is approximately 12,600 yuan per ton (excluding tax), which is approximately 2,500 yuan less than the cost of tons of aluminum in the same project in Henan Province.

If you use the captive power plant, the cost per ton of aluminum in the electrolytic aluminum project in Xinjiang can be reduced to 11,000 yuan (excluding tax). Under the current aluminum price environment of 14,500 yuan per ton, there is not much room for profit.

As the electricity price of the electrolytic aluminum industry lifeline, it does not appear to be a problem in Xinjiang, and the proportion of local electricity prices to the cost of electrolytic aluminum is already very low.

Compared to the 6-plus-ton electricity price in Henan, the cost advantage is obvious. It is precisely under this low-cost drive that many enterprises in Henan have joined the army of the west. Among these are Jiaozuo Wanfang (9.88, -0.18, -1.79%) and Yulian Energy.

At present, more than a dozen companies have entered the electrolytic aluminum industry in Xinjiang, and its long-range planned production capacity has reached 16 million tons. This slightly aggressive "West Wind" is also worrying.