Why is the price of aluminum so awesome?

Recently, the price of aluminum has hit a new high. On March 16, the spot aluminum price in Shanghai was 17760 yuan, and the main contract of Shanghai aluminum in the futures market climbed to 17955 yuan in the night trading on March 15, breaking the 18000 yuan mark close at hand, reaching a nine-year high. This is a normal performance of aluminum prices rising all the way after falling off a cliff to 11460 yuan in March last year since the outbreak of the COVID-19 epidemic.

At the beginning of last year, under the influence of the COVID-19 epidemic, aluminum prices plummeted. With the improvement of the situation of epidemic prevention and control in our country, aluminum prices rebounded rapidly, breaking through the ten thousand six and ten thousand seven mark successively. The rise in aluminum prices is so gratifying that everyone can't help but ask each other, why? The reporter thinks that there are three main reasons.

First of all, the supply-side structural reform of the aluminum industry has contributed greatly.

In the past ten years, China's electrolytic aluminum industry is mired in the quagmire of overcapacity and once struggled with losses or small profits of the whole industry. To this end, the state has successively issued relevant regulation and control policies to strictly control production capacity growth and promote the orderly and healthy development of the industry. In particular, on April 12, 2017, the National Development and Reform Commission, the Ministry of Industry and Information Technology and other four ministries jointly issued the "Special Action Plan for cleaning up and rectifying illegal projects in the Electrolytic Aluminum Industry" (hereinafter referred to as "the plan"), which made strict regulations on the new illegal production capacity of electrolytic aluminum. The industry calls it "the strictest regulation in history". With the implementation of the "plan", the new electrolytic aluminum production capacity in China has been effectively controlled. at the same time, enterprises are actively encouraged to optimize the industrial structure through capacity replacement, eliminate backward production capacity, and promote the high-quality development of the industry.

Under the regulation and control of supply-side structural reform, at present, China has basically formed the "ceiling" of electrolytic aluminum production capacity. In 2020, the operation situation of China's electrolytic aluminum industry has been significantly improved, achieving a good profit situation of the whole industry.

Second, promoting the expansion of aluminum application is the top priority. We should grasp the regulation and control of supply on the one hand, expand demand on the other, and adopt a two-pronged approach. This is the main magic weapon for China's aluminum industry to resolve overcapacity in recent years.

Since 2012, under the strong advocacy and organization of the China Nonferrous Metals Industry Association, the industry has launched the first series of activities to promote "green aluminum". Since then, a theme focusing on expanding the field of aluminum applications has been launched almost every two years.

Do meritorious deeds for a long time and do good deeds for a long time. After more than ten years of joint efforts of colleagues in the industry, the expansion of aluminum application has achieved remarkable results. At present, China's new aluminum products such as all-aluminum semi-trailers and aluminum formwork have accounted for half of the market in this field, the aluminum market for lightweight cars is gaining momentum, and the development of the all-aluminum home market is advancing in an orderly manner. A series of urban construction and new infrastructure markets such as aluminum flyovers are beckoning to the aluminum industry.

With its excellent properties such as light weight, environmental protection and anti-corrosion, aluminum materials are setting off a round of material replacement upsurge of "aluminum wood", "aluminum steel" and "aluminum saving copper" in some new aluminum fields, such as transportation, aerospace, building electronics and so on. A stronger demand market is emerging.

Third, the more critical factor affecting aluminum prices is confidence. Investors' confidence in the healthy development of China's aluminum industry, China's economic strength, and the future global economic recovery.

In 2020, in the face of the sudden COVID-19 epidemic and the severe and complex international situation, China's GDP exceeded 100 trillion yuan for the first time, becoming the only major economy in the world to achieve positive economic growth. Under the support of strong economic growth momentum, in 2020, the output of ten kinds of non-ferrous metals in China also broke through the 60 million tons mark for the first time, and the output of electrolytic aluminum reached 37.08 million tons, all of which reached an all-time high.

This year, China also created another human miracle in history-- a comprehensive victory in the battle to get rid of poverty, which lifted nearly 100 million rural poor people out of poverty.

These remarkable answers have boosted the confidence of global investors in the Chinese government and the Chinese economy, while injecting vitality into the world economy, which has been mired in the worst recession since the end of the second World War.

In the government work report delivered by Premier Li Keqiang at the just-concluded national two sessions, China's GDP growth rate was set at more than 6% this year, which was previously predicted to be even higher. for example, the International Monetary Fund ((IMF)) predicted that China's GDP would grow by 8.1% this year.

Confidence is more important than gold. With the global use of novel coronavirus vaccine, the global economy, represented by China's economy, is beginning to pick up this spring. It is certain that under the regulation and guidance of the main body of the world's largest electrolytic aluminum production and consumption market, this round of aluminum price rise is not accidental, but inevitable.

Of course, a single flower does not make spring. A hundred flowers blossom in spring. In the new year, China's aluminum industry still faces many challenges, but we firmly believe that as long as the aluminum industry continues to work hard, not only the price will continue to be so awesome in 2021, but all aspects of China's aluminum industry will be the same!