Major production of non-ferrous metals

　　Data show that this year, LME copper prices fell 26% to 4,500 US dollars / ton, LME aluminum prices fell 19.71% to 1,500 US dollars / ton, LME zinc prices and LME nickel prices fell 30% and 40% respectively.

 

　　In November, Alcoa and Russia's aluminum companies successively made production reduction plans, and a series of domestic joint production reduction conferences were held to discuss supply-side reforms and production cuts.

 

　　“The concentration of domestic non-ferrous industries relative to coal and steel is still relatively high. Under the leadership of some leading enterprises, it is still possible to achieve short-term production capacity control through negotiation, but it is really necessary to achieve capacity shrinkage or even permanent shutdown. Need the power of the market.” Xu Hongping, an analyst with China Merchants Futures Nonferrous Metals, believes.

 

　　In addition, mergers and acquisitions have also become the main way of de-capacity. According to informed sources, “At present, the merger of Chinalco and the national electric power investment aluminum plate is also in the process of negotiation.”

 

　　Domestic and international production boom

 

　　In 2015, the non-ferrous metal market was filled with a tragic and decisive atmosphere. After the price decline of most colored varieties experienced, the capacity contraction became the industry consensus. The hardship of the commodity giant Glencore can be seen as a microcosm of the colored industry.

 

　　With the continuous decline in commodity prices in the past two years, Glencore's share price has fallen from the July high of 379.45 pence all the way to the low of 66.67 pence on September 28 this year. The stock price has fallen by more than 80%, and its solvency is even more Many questions have been questioned by the market.

 

　　On October 9th, Glencore chose to break the arm to survive, announced that its zinc mine will reduce production by one-third. Subsequently, it announced plans to divest some copper mine assets and reduce the production of basic metals such as copper and lead. The market once recovered confidence and metal prices. A brief warming occurred.

 

　　However, due to the Fed's interest rate hike expectations and the slowdown in China's economic data, non-ferrous metals prices have seen a new round of plunge after the temporary support of Glencore's production cuts, and more international metal giants have joined the ranks of production cuts.

 

　　In November, Alcoa announced that it will cut its smelting electrolytic aluminum capacity by 503,000 tons and alumina refining capacity by 1.2 million tons, equivalent to 1% of global supply. The CEO of Rusal's aluminum company said on November 17 that it plans to cut up to 200,000 tons of aluminum.

 

　　In addition, the CEO of the Chilean National Copper Corporation, the world's largest copper producer, also recently said that if the price of copper falls, the company may cut production.

 

　　“In the past, the strategy of overseas mining giants was generally to accelerate the release of production to suppress prices, squeeze small and medium-sized producers to withdraw, wait until China stimulated demand, and then harvest more markets and profits. However, this year China began to endure low-speed economic growth and proposed Supply-side reform plan. In the medium and long term, the demand for bulk commodities will decline further, and foreign commodity giants can only choose to reduce production,” said a researcher at the financial business headquarters of a large domestic futures company.

 

　　The domestic non-ferrous industry began a series of industry joint production cut-off meetings from the end of November to discuss supply-side reforms and production cuts.

 

　　On November 20th, 10 key enterprises in China's zinc industry, such as Zhuzhou Smelting Group and Zhongjin Lingnan, held a symposium on the analysis of the operation of the zinc industry, and agreed to strictly control the newly added capacity, and planned to reduce the output of refined zinc in 2016 by 500,000 tons.

 

　　A week later, eight major Chinese nickel producers, including Jinchuan Group and Jean Nick, also held a symposium and issued a joint proposal to reduce the production of 15,000 tons of nickel metal in December. 20%.

 

　　Since then, 10 Chinese copper smelting enterprises, including Jiangxi Copper and Tongling Nonferrous Metals, have issued a joint proposal on December 1 and plan to reduce refined copper production by 350,000 tons in 2016.

 

　　The 14 electrolytic aluminum companies, including Chinalco and Weiqiao, have jointly promised not to restart the shutdown capacity, and will further increase the scale of flexible production.

 

　　The Gao Hua Securities Research Institute said that “credit default is one of the real driving factors for accelerating capacity closure.”

 

　　Aluminum company restructuring expectations

 

　　On Thursday, the Federal Reserve announced that it would increase the federal funds rate by 0.25 percentage points from December 17, local time, and the new federal funds target rate will remain in the range of 0.25% to 0.50%. The Fed's rate hike boots finally landed.

 

　　Xu Hongping believes that “from the perspective of the disk, commodity prices have not experienced major fluctuations, mainly because the expectations of interest rate hikes have been fully demonstrated in the market, and the rate hike has not exceeded expectations.”

 

　　The above-mentioned financial business headquarters researcher said, “At present, the US dollar index is not the only factor affecting commodities. The interest rate hike has not had a significant impact on the US dollar index, and the supply and demand pattern of the entire bulk commodity has not changed.”

 

　　Wang Zairong, chief analyst of COFCO Futures, believes that “advancing the supply-side reform will help to repair the imbalance between supply and demand of bulk commodities such as non-ferrous metals. Through supply-side reforms, some overcapacity enterprises may be subject to policy restrictions, and large-scale production will continue. It is suppressed to improve product quality and consume inventory, which will have a positive impact on market output. The non-ferrous industry will accelerate the capacity contraction and mergers and reorganizations, accelerate the metabolism on the production side, eliminate backward production capacity, and promote the entry of new production capacity. Show.”

 

　　Liu Xiaolei, an analyst at Shanghai Nonferrous Metals, said, “In the non-ferrous varieties, the overcapacity of electrolytic aluminum is more prominent. At present, the efforts to reduce production are also relatively large, and it is expected to continue.”

 

　　According to the China Nonferrous Metals Industry Association, electrolytic aluminum companies have reduced production by 4.41 million tons this year. According to preliminary statistics, before the end of the year, the capacity of electrolytic aluminum production will increase by at least 500,000 tons. The annual production reduction will reach 4.91 million tons, and the scale of alumina production will exceed 7 million tons.

 

　　According to the China Merchants Securities Research Institute, the basic metal supply side reform method also includes improving the economic benefits through mergers and acquisitions, and forming a “comprehensive mining company” with global resistance.

 

　　Wang Zairong believes that “in the process of this comprehensive downturn of commodities, the decline of aluminum is relatively large, and in the process of manufacturing and manufacturing aluminum, there is a certain pollution to the environment, so the related aluminum companies are very It is likely to become the vanguard of the restructuring and reform of non-ferrous enterprises.”

 

　　According to people familiar with the matter, “At present, the merger of Chinalco and the national electric power investment aluminum plate is also in the process of negotiation. In addition, another version is considered to be the merger of three companies, namely Chinalco, China Nonferrous Metals, and National Power Investment Aluminum. Create an integrated group that integrates upstream and downstream and industrial chain integration.”