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Why is aluminum ingots shortage in China with aluminum producing capacity increasing?


Why is aluminum ingots shortage in China with aluminum production capacity increasing?

In recent years, with the rapid expansion of China's electrolytic aluminum production capacity, the associated warehousing industry has also developed rapidly, from the initial focus in South China and East China to Central China and North China, and now even the West has warehousing layout and futures delivery. storehouse. Today, with the transfer of electrolytic aluminum production capacity and the extension of the manufacturer's industrial chain, the original business model of warehousing aluminum ingots is facing challenges, and it also begins to affect traders and downstream manufacturers. The chain reaction of this has attracted the attention of the industry.

Warehouse arrivals decrease year by year

In the past few years, at the end of the year and the beginning of the year, most of the aluminum ingot warehousing companies were the busiest and most turbulent times. It stands to reason that there are customers who deliver goods, and it is a happy event that the arrival volume is large, but the arrival of the goods in a short period of time cannot meet the customer's storage capacity needs, but it is a thankless and unprofitable thing to do. In order to serve the manufacturers and traders well, the warehouse operators have to start preparing for the warehouse explosion every year at the end of the year, contact the venue, and free up the warehouse capacity. And every time after the Spring Festival, most warehouses are filled with aluminum ingots, and some warehouses and even the passages in the field will be tightly blocked by aluminum ingots. In the most stressful time, customers need to queue up for a day to unload a car of aluminum ingots, and they need to wait for the goods to be vacant before they can be unloaded. It is normal for it to take a day to pick up a truck. The explosion of warehouses has become the most realistic portrayal of the aluminum ingot storage industry in South China and East China in the past few years.

Since 2019, the aluminum ingot warehousing industry has lost the glory and busyness of previous years. Every day warehouse spaces are empty, and sports cars can be used. It has become the most vivid joke in some warehouse scenes in the parking lot. Whether the highlight moment of the warehousing industry has become a thing of the past is a question that needs to be considered urgently in front of the warehousing industry. According to industry statistics, since 2018, the number of aluminum ingots arriving in major areas and warehouses has begun to decrease. In 2019, it is even more obvious, especially the aluminum ingots arriving at the warehouse in Foshan, Guangdong has been significantly reduced by one-third. In 2020, except for a few aluminum ingots that were concentrated at the beginning of the year, most of them were only sporadic throughout the year. In the past few years, the entire Guangdong Foshan warehouse has maintained a long-term inventory of more than 300,000 tons of aluminum ingots, and now it is often only about 100,000 tons.

The output of electrolytic aluminum has grown steadily

What is the situation of the output of the upstream electrolytic aluminum manufacturers corresponding to the reduction in the arrival of aluminum ingots in the warehousing industry? In recent years, the development of China's electrolytic aluminum industry has undergone several macro-controls. Although the electrolytic aluminum production capacity is close to the ceiling, it has maintained steady growth in terms of actual production capacity and output in recent years and will continue to grow in a short period of time. up.

According to Antaike's forecast, China's electrolytic aluminum production capacity will reach 42.96 million tons in 2020, a year-on-year increase of 3.9%. In 2020, China's actual operating capacity is 39.23 million tons, a year-on-year increase of 8.3%; the output will reach 37.15 million tons, a year-on-year increase of 3.4%.

On the one hand, the domestic production of electrolytic aluminum has grown steadily, on the other hand, the arrival of goods in the warehousing industry has been decreasing year by year. Although many people in the industry have a lot of confusion, the data is real, and the reduction in the number of aluminum ingots has begun to make the warehousing industry feel the pressure of survival and development, which will inevitably affect the trade pattern of aluminum ingots.

According to the survey statistics from relevant institutions in the non-ferrous metal industry, in 2020, the daily inventory of aluminum ingots in the 16 aluminum ingot storage markets across the country is about 700,000 tons, which is significantly lower than the inventory of more than 1 million tons in previous years. In the past, Guangdong Foshan, Jiangsu Wuxi, and Shanghai were the main warehouses, among which Guangdong, Shanghai, and Jiangsu were the most important, accounting for more than 70% of the entire ton of aluminum ingot warehouse inventory.

The whereabouts of aluminum ingots are not a mystery

In fact, some changes and phenomena that have quietly occurred in the aluminum industry in recent years have proved that the whereabouts of aluminum ingots is not a mystery. It's just that most people in the industry still stay in the thinking and mode of the aluminum ingot-warehouse-processing factory model of the upstream manufacturers of the aluminum production chain in the past.

Change 1: Electrolytic aluminum enterprises began to directly melt and cast alloy bars, reducing the shipment of aluminum ingots. In fact, since 2014, many electrolytic aluminum enterprises such as Xinfa Group, Hope Group, and Weiqiao Group have begun to directly cast rods and sell molten aluminum on the spot. As we all know, aluminum ingots are the basic raw materials for aluminum processing. Generally, aluminum ingots need to be melted into a furnace to add auxiliary materials and then cast into alloy rods (called aluminum rods), which consume a lot of energy. With the restriction and increase of environmental protection and energy-saving policies in various places, many electrolytic aluminum enterprises have begun to directly produce aluminum alloy rods for downstream manufacturers or sell aluminum water to other enterprises to cast alloy rods in order to adapt to the development of the situation, and some downstream manufacturers have avoided the melting and casting process. Also, develop the habit of directly purchasing aluminum rods for processing. At present, the proportion of aluminum rod production in electrolytic aluminum plants has been increasing.

Change 2: The industrial transfer of the aluminum industry has also changed the trend of aluminum ingots to a large extent. In recent years, whether it is the transfer of electrolytic aluminum production capacity to important coal energy regions such as Xinjiang and Inner Mongolia in the early stage, or the transfer to Yunnan and Sichuan clean energy provinces in the past two years, the transfer of aluminum processing industry has not stopped. step down. The original pattern of Guangdong aluminum processing as a single province has long been rewritten. Some leading electrolytic aluminum plants such as Chinalco Group, Xinfa Group, and Weiqiao Group have expanded their industrial chains one after another, and their reach to the downstream has become more and more extensive, and a number of manufacturers have attached themselves to their surroundings and have begun to form a certain scale of industrial clusters. A large amount of aluminum water produced by electrolytic aluminum plants is digested, so that the aluminum ingots leaving the factory are becoming less and less.

Change 3: Changes in trade methods have also reduced the number of aluminum ingots arriving in warehouses. For a long time, the circulation of aluminum ingots has been first shipped from electrolytic aluminum manufacturers to warehouses around the world, and then delivered to downstream processing plants. In the past two years, the transaction method has undergone major changes. Traders and manufacturers directly place long-term orders, door-to-door, direct car transportation to the factory after purchase, or direct short-distance steam operation to the factory after arrival by rail (waterway), eliminating the need for warehousing. The intermediate link directly affects the amount of aluminum ingots arriving in many warehouses, especially in Foshan, and Guangdong.

Change 4: The increase in the aluminum ingot warehousing industry itself has also reduced the respective arrivals in disguise. In recent years, the storage of aluminum ingots has also been continuously expanded according to market demand and has developed from Guangdong, Shanghai, Jiangsu, and Zhejiang to 16 regions such as Henan and Shandong. The increase in local and non-local warehousing companies has spread the arrival of aluminum ingots, which has put more pressure on the original warehousing companies to compete, and the reduction in the volume of aluminum ingots is only natural.

In addition, the price difference between premiums and discounts in various places is also a non-negligible problem that affects the arrival of aluminum ingots. When there is a clear gap between the freight and premiums and discounts in various places, it will also affect the arrival volume of aluminum ingots sent by various electrolytic aluminum manufacturers to various regions.

Industrial layout under new formats

Most of the existing electrolytic aluminum production capacity provinces have begun to change. They cannot only develop electrolytic aluminum primary products (aluminum ingots), but also increase the concept of added value, and compete to use their own electrolytic aluminum advantages for deep processing to obtain benefits. This will undoubtedly become a change in the future of aluminum Determinants of ingot orientation. This also gives us the best annotations and tips for us to face up to the business format and plan our investments.

Shandong Binzhou has put forward the grand goal of building a high-end aluminum industry cluster of 500 billion yuan by 2025. It is required to take advantage of Weiqiao Group's 6 million tons of electrolytic aluminum production capacity to implement an industrial development model that integrates upstream and downstream. Among them, Lizhong Group plans to invest 1.08 billion yuan to build a project with an annual output of 450,000 tons of high-performance aluminum alloy castings for automobiles and 30,000 tons of high-strength aluminum castings for automobiles. The first phase of the project has been put into production. Bohai Automotive Systems Co., Ltd. has an annual production capacity of 30 million pistons of various types. Shandong Huajian Aluminum Co., Ltd., together with Weiqiao Group and Shandong Innovation Group, plans to build a high-end aluminum deep processing industrial park, with a planned total investment of 10 billion yuan. Weiqiao Group itself has also set a grand vision, and will continue to promote the "aluminum-electricity integration" and "upstream and downstream integration" industrial models, and constantly improve the "thermoelectric-mining-alumina-primary aluminum-high-precision aluminum sheet, strip, foil, new materials" industry chain, and create a characteristic aluminum industry cluster with great global development potential, strong support and driving ability, and high-quality development.

As Yunnan Province, which has absorbed 4 million tons of electrolytic aluminum production capacity transfer in the past two years, its local government and electrolytic aluminum enterprises have promoted the construction of projects to supplement and extend the chain, strengthen aluminum processing and deep processing, and promote the industry and products to more Target requirements for high-value chain extension. Having joined the big family of Chinalco, Yunnan Aluminum Co., Ltd., which has a production capacity of 2.4 million tons of electrolytic aluminum, has formulated a green and low-carbon hydropower aluminum processing integration strategy, and will build a high-end aluminum ingot and aluminum alloy production base, an ultra-thin aluminum foil production base, and a low-carbon production base. A high-end aluminum welding material production base, to build a 100 billion-level base in the southwest Chinalco aluminum industry.

Since aluminum ingots are "hard currency" and are easily liquidated, they can be used for futures delivery and hedging. Although some large electrolytic aluminum enterprises are producing aluminum rods, selling aluminum water, or extending the industrial chain, the current aluminum ingots are still Still the main product sold in the market, aluminum ingots still dominate the trade. It is also for this reason that in the domestic futures market, there are often months when there is a short squeeze due to the lack of deliverable varieties.

Undoubtedly, the adjustment of the industrial model focusing on the production of aluminum ingots is already on the way, which will surely reshape the industrial pattern. Faced with this trend and change in the electrolytic aluminum industry, aluminum ingot warehousing, as one of the links in the aluminum industry chain, should also adjust its development ideas as soon as possible, face challenges and actively respond to them, invest prudently, and follow the trend. Only in this way can we catch the wind and let ourselves and our enterprises go longer and farther in the aluminum industry chain.

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