Analysis on electrolytic aluminium industry in the China

In China, average electric consumption of electrolytic aluminium is 14500~15000 kwh/ton, average price 0.36~0.40 yuan/kwh. And adding of 0.05 yuan/kwh means cost increasing of more than 700 yuan/ton.

Rise of alumina and electric prices greatly impact electrolytic aluminium cost in the country; even worse, it will affect profit of the industry in the long run, especially for non-Chalco plants that rely immensely on international spot alumina supply. While under the pressure of oversupply, electrolytic aluminium market in China performs weak where spot price is falling to its lowest level of the recent two years.

The country strengthened its control in aluminium industry through restructure, refreshing the whole aluminium enterprises and easing rough expansion of output. However, the situation changed again this year. Output growth is unlikely to slow down in 2008 as oversupply and tax adjusting block the export. Electrolytic aluminium, in general, is facing three dilemmas: rise of production cost, sustained low in spot market and oversupply.

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