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Guizhou Aluminum Enterprises Trapped in Dilemma, Industrial Chain Needs Further Extension

Recently, relevant institutions organized survey of Guizhou aluminum enterprises, according to survey results, at present Guizhou aluminum enterprises have entered dilemma, enterprise profits shrank continually. In recent years as the nationwide electrolytic aluminum industry quickly expanded, electrolytic aluminum industry in Guizhou region on the contrarily presented gradual shrinking trend.

According to statistics, at present Guizhou’s aluminum capacity is 1.10 million tonnes, but the operation capacity is only 690,000 tonnes, operating rate is only 62%, and the existing still active electrolytic aluminum factories all are trapped in loss to varying degrees. Guizhou boasts abundant bauxite resources, and is originally suitable for developing aluminum industry, but in recent years alumina price remained low, electricity cost became a decisive factor in determining production cost and profit-earning status of electrolytic aluminum enterprises.

Although Guizhou boasts abundant coal resources, because it’s difficult to obtain qualification approval for building self-owned power plant, almost no aluminum enterprises have self-owned power plant, and all use grid electricity, this is also the main reason why Guizhou’s many aluminum enterprises were trapped in the eddy of loss. Furthermore, due to consideration for performance and employment, local governments not only disallow suspension of production, and even support further re-start of idle capacity, which resulted in increasing supply of electrolytic aluminum output, but downstream demand failed to show any improvement, which aggravated the surplus of aluminum supply in Guizhou.

Since the state government cancelled differentiated electricity price in 2010, electrolytic aluminum industry changed from previous competition between enterprises to regional competition; in the competition of electrolytic aluminum industry characterized by high product homogeneity, and relative surplus of capacity, Guizhou area undoubtedly is trapped in inferior position, the ways for Guizhou aluminum enterprises to improve its competitiveness in the future can only be: Firstly, reduce electricity cost, but this is more restrained by policies of local governments; secondly, industrial chain further spread to downstream, improve product added value.