Navigating Change: The Future of the Electrolytic Aluminum Industry Amid Policy Transformation

Recently, the electrolytic aluminum industry, like a trendsetter in a new wave of reforms, is welcoming a series of significant policy directives. This article will unveil the potential and transformations of the electrolytic aluminum industry chain under policy guidance, exploring future development trends to help you seize opportunities in this rapidly changing market.

On July 23, the National Development and Reform Commission, along with multiple departments, issued the "Special Action Plan for Energy Conservation and Carbon Reduction in the Electrolytic Aluminum Industry." The introduction of this policy serves as a guiding light for the electrolytic aluminum sector, clearly defining energy-saving and emission-reduction targets in high-energy-consuming and high-emission industries, paving the way for sustainable development. Compared to the "Energy Conservation and Carbon Reduction Action Plan for 2024–2025" released two months prior, this new directive is more actionable and directly addresses the pressing needs of the electrolytic aluminum industry.

Looking at the specifics of the policy, it not only quantifies goals but also provides various pathways to achieve them, including optimizing industrial layout, improving energy efficiency, and promoting the use of non-fossil energy sources. Its long-term impact on the electrolytic aluminum industry chain will create ripples worthy of market attention.

In the future, electrolytic aluminum production will face stricter requirements for green and low-carbon operations, and the limitations on capacity expansion will drive the industry toward higher quality. This supply rigidity will provide robust support for aluminum prices, especially in the event of unforeseen incidents, acting as a potential catalyst for price increases.

According to statistics from Aladdin, as of July, the established capacity of electrolytic aluminum nationwide is nearing 45 million tons, with a utilization rate of 96.67%. This indicates that supply rigidity is gradually solidifying, and the profitability of the aluminum industry is continuously enhancing, with profits progressively concentrating in the upstream smelting sector. In the future, as new growth points in downstream demand emerge, the high profitability of the smelting sector is expected to continue, with annual production capacity stabilizing around 43 million tons.

It is important to note that the increase in the direct alloying ratio of aluminum water will profoundly impact the inventory and futures delivery of electrolytic aluminum. The policy goal is to achieve a direct alloying ratio of 90% or more by 2025. The low inventory of aluminum ingots will further strengthen the support for futures prices, thereby affecting the pricing of other aluminum products. According to data from Aize, in the first half of 2024, the industry’s aluminum water ratio has reached 74.14%, while the ingot production has decreased by 11.15% year-on-year, with future ingot production potentially facing a decline of over one million tons.

For downstream aluminum processing enterprises, the increase in the direct alloying ratio can reduce costs but also complicates inventory management. Primary aluminum processing companies must rapidly transform to high value-added green deep-processing products. Additionally, due to poor price transmission, fluctuations in raw material prices will directly affect the pricing of end products, making risk management in production and operations particularly crucial, especially in leveraging financial tools to address raw material price volatility.

In summary, these policy directives not only guide the electrolytic aluminum industry's energy conservation and carbon reduction efforts but also subtly reinforce the rigidity of aluminum supply. Looking ahead, profits in the aluminum industry chain will continue to tilt toward the upstream smelting sector, and changes in market inventory structures will prompt relatively disadvantaged aluminum processing enterprises to accelerate their transformation and upgrading to capitalize on emerging opportunities.