Ministry of Industry and Information Technology: Operation of Copper and Aluminum Industry in 2018

Recently, the Ministry of Industry and Information Technology released the operation of China's copper and aluminum industries in 2018.  The performance is as follows: in 2018, the overall operation of China's copper industry was stable and its benefits increased, but the price increase dropped, environmental protection pressure increased and downstream consumption power was insufficient.  The aluminum industry deepened the structural reform on the supply side, strictly controlled the new production capacity of electrolytic aluminum, promoted the replacement of electrolytic aluminum production capacity, and the overall operation of the industry was stable. However, the impact of trade friction gradually appeared, the production cost continued to increase, the industry benefits declined, and the overall development situation was not optimistic.
Operation of Copper Industry in 2018
First, production increased year on year and technological progress accelerated.  In 2018, China's copper concentrate (metal quantity), refined copper and copper output reached 1.51 million tons, 9.04 million tons and 17.16 million tons, up 3.9%, 8% and 14.5% respectively from the same period last year.  As enterprises accelerate their greening, intelligent transformation and development of deep processing, the investment in fixed assets in the copper industry has rebounded and technological progress has been made. The comprehensive energy consumption of copper smelting is 230.7kg standard coal/ton, down 2.5% year on year, and the comprehensive yield of copper materials is 79.6%, up 3.5% year on year.

Second, the price fluctuated downward and the growth rate of benefits fell back.  In 2018, affected by trade frictions, a strong US dollar and weak demand, the copper price fluctuated down. The average spot price of copper for the whole year was 50689 yuan/ton, up 2.9% year on year and down 26.3% year on year.  In the whole year, the copper industry realized a profit of 39.6 billion yuan, up 4.3% year-on-year, down 25.8 percentage points year-on-year, of which the copper mining and dressing realized a profit of 5.6 billion yuan, down 11.5% year-on-year;  The copper smelting and copper processing industries realized profits of 14.7 billion yuan and 19.3 billion yuan, up 9.9% and 5.8% respectively year-on-year, and the growth rate dropped 23.5% and 12.3% year-on-year.
Third, the import and export trade continues to grow and the degree of dependence on foreign countries continues to increase.  According to statistics of the nonferrous metals association, in 2018, the total import and export trade of copper products was 86.8 billion us dollars, up 20.3% year on year, of which, the import amount was 79.8 billion us dollars, up 17.3% year on year, and the export amount was 7 billion us dollars, up 7.9% year on year.  In terms of product categories, in recent years, China's imports of copper products have continued to grow rapidly and the overall dependence of copper resources on foreign countries has continuously increased. In 2018, the net domestic imports of copper metal increased by 36% compared with 2013. With the implementation of the policy of prohibiting foreign garbage from entering China, the import of scrap copper decreased by 32.2% year-on-year, and the export of copper processed materials continued to grow. The total annual export volume was 510,000 tons, up 6.7% year-on-year.

Fourth, the pressure on environmental protection is increasing and the downstream consumption power is insufficient.  In 2018, domestic pollution prevention and control efforts continued to increase, the solid waste import policy was tightened, and the pressure on the green development of the industry was enormous.  The output of domestic automobiles and power generation equipment decreased year on year, the output growth rate of white goods declined, and the overall consumption of copper industry was not optimistic. According to statistics of the Association, China's copper consumption in 2018 was 13.05 million tons, up 2.5% year on year, with the growth rate falling by 4.6 percentage points.
In 2019, the domestic and international environment will become increasingly complex, which will have a certain impact on the copper market and the domestic terminal manufacturing industry. Domestic copper consumption will continue to slow down, environmental protection pressure will continue to increase, and downward pressure on the copper industry will be more prominent. The establishment of a full-process green manufacturing system and the development of high-end copper materials will be the main direction of the industry's high-quality development.  The Ministry of Industry and Information Technology will support the copper industry to speed up technological transformation, promote the industry to shift from focusing on product quality and performance to paying more attention to improving the level of resource utilization, energy conservation and emission reduction in the whole life cycle, build intelligent copper mines and factories, and realize green and intelligent development.  Give full play to the role of copper as a functional material, actively develop high-end copper materials, expand copper application, and support the development of strategic emerging industries and national defense science and technology.

Operation of Aluminum Industry in 2018
First, the output increased year on year and the growth rate of aluminum decreased.  In 2018, the output of alumina, electrolytic aluminum and aluminum products reached 72.53 million tons, 35.8 million tons and 45.54 million tons, up 9.9%, 7.4% and 2.6% year on year respectively. Considering the adjustment of statistical data, the output of electrolytic aluminum increased by 5% year on year.  Due to the impact of trade frictions and sluggish domestic consumption, the growth rate of aluminum output dropped 7 percentage points year on year.
Second, prices fell, costs rose and benefits declined significantly.  In 2018, the average spot price of domestic electrolytic aluminum was 14,262 yuan/ton, down 1.8% from the same period of last year. Due to environmental protection rectification, bauxite prices continued to rise, coal prices rose, and the cost of energy saving and emission reduction for enterprises increased, the comprehensive production cost of electrolytic aluminum increased significantly from the same period of last year.  In 2018, the aluminum industry realized a profit of 37.2 billion yuan, down 40% year on year.  Among them, the profit from aluminum mining and beneficiation reached 700 million yuan, up 19.6% year on year.  Aluminum smelting and aluminum processing industries realized profits of 11.2 billion yuan and 25.4 billion yuan, down 54.6% and 31.4% respectively from the same period last year.

Third, capacity replacement is accelerating and the industrial structure is further optimized.  Since the issuance of the Notice on Relevant Matters Concerning the Implementation of Capacity Replacement by Electrolytic Aluminum Enterprises through Mergers and Reorganizations (No.12 [2018] of the Ministry of Industry and Information Technology), more than 4 million tons of electrolytic aluminum capacity have been replaced across provinces, of which more than 3 million tons have been transferred to energy-rich areas such as Inner Mongolia and Yunnan. While maintaining a tight control over the high pressure of electrolytic aluminum capacity, the industrial structure of electrolytic aluminum has been continuously optimized.
Fourth, the export of aluminum products has increased dramatically and the international trade environment is not optimistic.  Affected by the fluctuation of price difference between domestic and foreign aluminum products and the devaluation of RMB exchange rate, China's aluminum export volume in 2018 was 5.23 million tons, up 23.4% year on year.  The shutdown of Brazil's Haideru Alumina Plant has caused a shortage of alumina supply overseas, with China exporting 950,000 tons of alumina net for the whole year.  Chinalco Group, Wei Qiao Venture Group and other overseas bauxite resources development projects continued to advance.  The chain reaction of trade frictions in the United States, the European Union, Mexico, Vietnam and other countries is prominent. The external development environment is increasingly grim. The future export of aluminum products will face a grim situation.
In 2019, the environment at home and abroad will become increasingly complex, the deep impact of trade friction will soon emerge, the downstream consumption situation is not optimistic, and the downward pressure on the aluminum industry is still great.  The Ministry of Industry and Information Technology will continue to deepen the structural reform on the supply side, continue to maintain the high-pressure situation of strictly controlling the new electrolytic aluminum production capacity, strictly implement the electrolytic aluminum production capacity replacement policy, study and establish a long-term mechanism to resolve excess production capacity through market-oriented legal means, actively expand the application of aluminum, and guide the high-quality development of the aluminum industry.
Source: Ministry of Industry and Information Technology official website