In 2010, driven by the rapid growth of upstream and downstream sectors, China’s whole year output of secondary aluminum reached 4 million tons, up by 29% on a year-on-year basis. The production output of secondary aluminum grew in successive years, and recorded new high every year. The output of secondary aluminum in 2010 surpassed the output of electrolytic aluminum ten years ago; China’s secondary aluminum industry has developed into an industry with considerable scale.

In 2010, China’s import volume of aluminumcontaining waste materials reached 2.85 million tons, with value of 4.29 billion USD, up by 8.7% and 56% respectively on a year-on-year basis. The output of aluminum products between January and November 2010 reached 19.994 million tons, up by 25.3% on a year-onyear basis. Massive quantity of waste materials generated from aluminum product manufacturing and processing entered recycling and utilization stages, thus becoming important raw material sources of secondary aluminum. Furthermore, urban relocation and renovation, and the implementation of trade-in policies for automobiles and household electrical appliances, also provided huge volume of aluminium scrap resources for the secondary aluminum industry.

The rapid development of secondary aluminum downstream sector increased the market demand for secondary aluminum products. Take the development of automobile industry, which is the main application field of secondary aluminum products, as an example, in 2010 the nationwide automobile output and sales were 18.2647 million and 18.0619 million vehicles respectively, up by 32.44% and 32.37% respectively on a year-on-year basis. In recent years,the usage of secondary aluminum products in hardware and household electrical appliance sectors also grew steadily. In 2010, China’s hardware and household electrical appliance products showed brisk growth in both production and sales. Among the 12 household electrical appliances being closely monitored by the National Statistics Bureau, between January and November 2010, 5 showed growth rate of above 20%. Meanwhile, according to statistics of the Ministry of Commerce, throughout the whole year 77.18 million sets of household electrical appliances were sold in the “Household Electrical Appliance Going Countryside”initiative, realizing sales of 173.2 billion yuan,up by 1.3 and 1.7 times on a year-on-year basis.The strong growth in both upstream and downstream sectors drove the continuous growth of secondary aluminum output.

In 2010, the fixed asset investment in secondary aluminum industry still remained active.Some leading enterprises one after another expanded production capacity, to name a few,Sigma Group, Ye Chiu Metal, Zhejiang Wantai Aluminum Co., Ltd, Longda Aluminum Industry Co., Ltd, Chongqing Shunbo Aluminum Alloy Co., Ltd, Zhaoqing Dazheng, Chongqing Jiantao which all expanded production scale.Furthermore, in China there also emerged areas in which the development of secondary aluminum industry concentrated, for instances, Jiangxi Fengcheng Industrial Park is building itself into a large secondary aluminum industry base in China, Guangxi Wuzhou Industrial

Zone is planned to build a 300,000 tons/year secondary aluminum project. Guangdong Zhaoqing Recycling Resource Park also welcomed several secondary aluminum manufacturers to enter and start construction. A number of downstream secondary aluminum application enterprises were also preparing to build secondary aluminum projects, so as to extend industrial chain to seek cyclic utilization of resources inside the company, and further reduce cost. According to incomplete statistics, the whole year production capacity of secondary aluminum in 2010 reached above 600,000 tons.

Many enterprises actively explored aluminium scrap treatment technologies and equipment,and made great efforts to improve aluminium scrap sorting and pre-treatment standard. Some independently developed energy-saving and eco-friendly furnace models will become the development focus of enterprises of certain scale, which will significantly improve their energy saving efficiency, productivity, and product quality. As a result, the percentage of using natural gas as fuel in the whole industry will gradually increase, the industry’s clean production standard will be further improved,and sulfur emission will drop. Some secondary aluminum enterprises began to extend toward press-casting field, and directly produce auto and motorcycle parts. Some enterprises have planned to develop “aluminum liquid direct supply program”, which can reduce ingot casting and re-melting process, and greatly reduce aluminum burnt loss and energy consumption.

In 2010 the state government also introduced a series of relevant policies and regulations to support and encourage the development of recycled metal industry, which accordingly exerted positive effect on the development of secondary aluminum industry.

In March 2010, the General Administration of Customs issued the No. 21 Notice, which prescribed that key imported solid wastes must be separately loaded according to category, and declared item by item in line with the declaration requirements. This is an important measure issued by the General Administration of Customs for the administration of imported solid wastes, aiming at “strengthening customs supervision and service, and promoting the healthy development of recycled resource industries.”

In April 2010, the Ministry of Industry and Information Technology, Ministry of Finance,and Ministry of Science & Technology jointly printed and distributed the “Notice on Organizing the Creation of Resource-saving and Environment-friendly Enterprises”. According to the Notice, a decision was made to create “resource-saving and environment-friendly” pioneer enterprises from a group of representative enterprises with good industry foundation, rational product structure, strong self-innovation ability, whose unit product energy consumption, pollutant emission and overall resource utilization standard have reached the leading standards of the industry.

In May 2010, the State Development and Reform Commission and the Ministry of Finance issued the “Notice on Carrying out the Construction of Demonstration Base of Urban Mine Production”. It notified the decision in five years to build up around 30 “urban mine production” demonstration bases with advanced technology, qualified environment-friendly facilities, standard management, scale utilization,and strong spoke-wise influence.

In October 2010, the State Council issued “Decision on Speeding up the Cultivation and Development of Strategic Emerging Industries”,which clarified that the state government would unveil a package of policies from such aspects as finance and taxation to speed up the cultivation and development of strategic emerging industries; recycled non-ferrous metal industry is listed as one key field in the energy saving and environmental protection industry, one of the seven strategic emerging industries.

The “Twelfth Five Year Plan” industry technology roadmap for waste nonferrous metal field, which is compiled by China Technology Innovation Strategic Alliance for Resources Recycling Industry, laid down foundation for healthy development of China’s recycled industry of waste non-ferrous metal. “The development of key technologies and equipment for integrated utilization of waste electromechanical products and plastic cement resources” project was examined and approved by experts.This project outlined relevant key subjects for the recycled aluminum field.

Behind the booming growth of the secondary aluminum industry, there still exist many problems that restrain the healthy development of the industry, which are mainly displayed in the following aspects:

1. Fierce competition to secure aluminium scrap resources

Currently China’s aluminium scrap are imported in large quantity from overseas each year. In recent years, the import grew every year by around 10-15%. Because countries around the world are paying more attention to recycled resources, the competition for international aluminium scrap resources is becoming increasingly fierce. Enterprises from India,Vietnam and other countries have become major rivals of Chinese enterprises in global market. On the other hand, the depreciation of US dollar resulted in difficulty in import operations; price inversion in both domestic and international aluminium scrap occurs quite often.The scale of aluminium scrap recycling inside China is still not large enough to develop a complete recycling system, and aluminium scrap resources are still widely scattered. The stable supply of waste material resources is an important factor in the sustainable development of secondary aluminum industry.

2. Low industry concentration degree

Owing to lack of industry access mechanism,the production scale of secondary aluminum enterprises differ widely; annual output of large enterprises may reach 300,000 tons, while small enterprises can only produce several hundred tons annually. There are a large number of enterprises with scattered production capacity.Vicious competition among enterprises has been intensified, the overall industry profit margin is small, and enterprises are weak in market risk resistance. Low industry concentration degree is unfavorable not only for efficient use of resources, the realization of the overall progress and scale benefits of the industry, but also for environment governance.

3. Repeated construction of low standard projects with singular product structure

In the secondary aluminum industry, there still exists low standard repeated construction,which leads to singular product structure in the industry. Many enterprises produce identical low-end products which result in fierce price war on the market. The price war causes many enterprises to suffer a lot. The industry urgently needs to diversify its product structure, and develop with great efforts new products of high added value which can satisfy more needs of the downstream sectors.

4. Low overall standard in technology and equipment in the industry

In recent years, the secondary aluminum industry has experienced rapid development, and a large number of enterprises of certain scale with advanced technologies and equipment have emerged. However, due to low industry concentration degree, the overall technology and equipment standard of the industry is still low, and problems of high energy consumption and pollution emission are still very prominent.Because there is still survival space for backward production capacity, the market has developed a pattern in which both backward production capacity and advanced production capacity exist side by side to share the market,resulting in wide differentiation of technology and equipment structure in the secondary aluminum industry.

During the “Twelfth Five Year Plan” period, as the state government takes steps to speed up adjustment of industry structure, especially against the policy background to quicken the cultivation and development of strategic emerging industries, the above problems will be resolved gradually. Looking ahead, the development of secondary aluminum industry boasts the following favorable factors:

1. Tremendous aluminium scrap resources accumulated provide favorable condition for sustainable development of secondary aluminum industry

With the fast growth of Chinese economy, by the end of 2009, the consumption sector has accumulated more than 100 million tons of aluminum resources. Domestically, there is huge potential for recycling aluminium scrap.During the “Twelfth Five Year Plan” period,the volume of aluminium scrap will also grow year by year; domestically recycled waste and miscellaneous aluminum will gradually become an important source of raw material, and provide abundant resources for the secondary aluminum industry The “2010-2015 Special Plan for Utilization of Recycled Non-ferrous Metal”also explicitly proposed to support regions with proper conditions to build aluminium scrap recycling market based on source of aluminium scrap, industry distribution and market demand,in order to speed up standardized trade and concentrated processing of aluminium scrap,and to develop a recycling and utilization system of secondary aluminum covering the whole society across the nation. These measures will provide conditions for the sustainable development of the secondary aluminum industry.

2. The distribution of secondary aluminum industry will be further optimized and industry concentration degree further improved

China will speed up adjustment of the industry distribution according to national distribution of aluminium scrap resources. Based on the existing key enterprises, the state government will comprehensively plan the national distribution of the secondary aluminum industry,support large secondary aluminum enterprises to implement upstream and downstream M&A in multiple ways, and improve industry concentration degree. The Ministry of Environmental Protection is compiling “Pollutant Emission Standard for Recycled Nonferrous Metal Industry -- Aluminum”. The new standard will better cater to the features of recycled nonferrous metals which differ from raw metal smelting,and provide more detailed and refined rules for characteristic pollutants generated from secondary aluminum smelting. Meanwhile, it will impose stringent industry access conditions,enforce within specific timeframe regulation and rectification of secondary aluminum enterprises (whose emission of “three wastes” exceeds qualified standard) below industry access criteria; strengthen environment supervision,phase out backward production capacity, promote the optimization of secondary aluminum industry structure, and realize intensive operation. As market competition becomes increasingly fierce and standardized, and policies and laws become more well developed, some enterprises with weak competitiveness, poor economic benefits, and heavy environment pollution will be gradually eliminated; in contrast,some large scale enterprises with good benefits and environment protection qualification will grow rapidly. In this way, the distribution of the secondary aluminum industry will be optimized, and the industry concentration degree will be progressively improved.

3. Huge space for improving the technology and equipment of secondary aluminum

During the “Twelfth Five Year Plan” period,the Ministry of Science & Technology will continue to encourage the establishment of secondary aluminum technology innovation system dominated by enterprises, oriented toward the market, which integrates “Production,Teaching and Research”, and speed up the R&D and popularization of key generic technologies and emerging advanced technologies in the industry; through introducing and absorbing overseas advanced technologies, encourage enterprises to develop a secondary aluminum technology system with Chinese characteristics, and implement industry-wide popularization. The focus should be placed on making breakthroughs in aluminium scrap pretreatment, smelting, energy saving and environment-friendly technologies and equipment,promoting the establishment of secondary aluminum industrialization, large scale demonstration base and industry clusters; meanwhile encourage enterprises to further increase the percentage of secondary aluminum products with high added value, excellent market growth potential, good economic benefits, and high technological contents, and continuously expand the application of secondary aluminum products. Through technological innovation, by 2015 it is expected that the technological and economic indexes of secondary aluminum industry will reach the world advanced standard,so that China will become a secondary aluminum power in the real sense.