Held on August 25, 2013 "to promote the application of aluminium forum", Russian Aluminum Company
development strategy and stock department deputy chief executive Oleg mukhamedshin on behalf of Rusal
and China Nonferrous Metals Industry Association signed the memorandum of understanding on cooperation.
After non-stop Russian aluminum, aluminum market, consumption and investment, aluminum industry how to
getrid of difficulties such as a hot topic of discussion with reporters for the exchange, through the newspaper
to the aluminum industry in China revealed some information, presents some views, puts forward some
suggestions.
China's aluminum consumption will grow by 10%, according to Oleg, the world's largest aluminum
production company, aluminum production reached 4100000 tons last year.Russian Aluminum has a complete
vertical upstream and downstream industry chain. At present, Russia has reached 72000 employees, the
headquarters is located in moscow.Russian aluminum is a listed company in Hongkong, the current market
value of about $9000000000.
Speaking of the aluminum market view, Oleg said, due to the European debt crisis and China's economic
growth slowdown, the current price and the market environment is not ideal for the world's commodities. At
the same time, the aluminum market is now in a very slow development period. But the phenomenon is not
due to a large number of demand reduction, but supply problems, because the current market demand is still
growing.
Despite the debt crisis in Europe, but now the consumption of aluminum products is still rising, Oleg believes
in this year's global demand for aluminum products will grow by 7% to 6%.
Oleg said that the growth of consumption is mainly driven by China, Japan and North America, he is expected
to China this year, the consumption of aluminum products will grow by 5%, Japan will grow 6%, the United
States will grow by 10%. Aluminum products are the main consumer sectors of the construction industry and
transportation industry in China, the United States, Japan are so. Despite strong consumer demand, but the
development of the aluminum market is still determined by the supply of global aluminum products.
Aluminum market prices should be determined by supply and demand relations, the global market of
aluminum products prices should be determined by the London Metal exchange. But now the pricing
mechanism of the London Metal Exchange and the price in this mechanism, can not reflect the real price of
aluminum. For example, now the market prices on the London Metal Exchange is 18.5 million U. S dollars /
ton,but in the current market price is not in accordance with the price buy aluminum products of must pay
nearly $200 / tons of premium, so regional premium as a tool, is used to adjust the price of the London metal
exchange, and aluminum products has also become a financial speculation of a tool. The London Metal
Exchange has reached 5000000 tons, but 75% of the reserves are not available to the market. These products
are purchased by investors, and then benefit from this low interest rate, low storage costs, the current annual
output of aluminum stock to bring profit reached 10%. Therefore, Oleg believes that the price of the London
Metal Exchange and the relevant regulations must be reformed to reflect the real situation of the market and
real aluminum prices.Need to eliminate backward production capacity Oleg in the analysis of the problem,
said that the current price of the aluminum market even if there is a regional premium, still can not reflect the
cost of the aluminum industry. At present, about 30% of the aluminum companies are in a loss, which is why
some of China's aluminum production enterprises have announced to reduce production, while closing the
unprofitable smelting plant. The global need for reduced production of smelting in about 130 million tons to
140 million tons between, 50 million tons of Rio Tinto announced production cuts, Alcoa announced to cut
output of 24 million tons, the Russian aluminum will also cut 275000 tons. Oleg hope that the aluminum
industry can have more self-discipline, and can achieve a balance, to create a fair price for aluminum. The
main problem of the current aluminum industry is that the main producers have stopped the development
work, but also did not invest in new projects.
In order to achieve the goal of saving energy and reducing consumption, reduce energy consumption and
emissions per ton of aluminum products, we need to vigorously develop the technology, so development and
Reform Commission and the Ministry of industry has also developed a corresponding guidance document.
Which requires new capacity should be built on the low energy prices and clean energy. Therefore, only those
near the low cost of power plants and environmental protection projects, to be able to obtain approval. As a
result of this policy, the whole of the aluminum industry from the Middle East to the west.
Therefore, in the "Twelfth Five Year" plan for the implementation of the 5 years, China's largest aluminum
production province should be Xinjiang, and not the current Henan. From here, Oleg believes that China's
aluminum companies should take into account the foreign investment, if the country's local energy costs are
very low, you can also consider the capacity of foreign investment. There is to the existing smelting plant
modernization, reduce emissions, improve energy efficiency. The third point is to eliminate those backward
production capacity. Oleg regret to say that the current price of the Shanghai stock exchange is set up between
15300 yuan ~15350 yuan / ton, he believes that the price should be fair in 16500 yuan / ton, and to achieve
such a price, it is necessary to shut down some capacity. He believes that the government must take measures
to stop the maintenance of low efficiency and high cost of production status, we must shut down these
inefficient capacity, while investment in new capacity, so that emissions less, energy-saving effect is better.
Chinese enterprises should go out" Russian Aluminum came to China, is hoping to invite Chinese aluminum enterprises to invest in new capacity in Siberia, russia. Calculated by the dollar, a smelting plant in Henan
to pay the tariff is 5 to 7 cents per kilowatt hour, while in Siberia only 3 cents. Primary aluminum major cost
elements including electricity price and the cost of alumina, China Henan weighted aluminum costs about
$2250 / ton, but in Russia Siberia, the new plant in Russia, the cost is $1600 / ton, the cost is much lower. Therefore, if the Chinese enterprises to invest in new capacity in Siberia, the production of aluminum products will be able to meet the low cost of the Chinese market, rather than support the development of the high cost
of smelting plant. At the same time, Oleg also on behalf of the Russian Aluminum invited Chinese enterprises
to Russia to carry out equity. This means that Chinese enterprises can obtain low-cost production of aluminum
products, while imports to the Chinese market, but also to reduce the energy consumption of aluminum industry, that is,the way through the export of aluminum products, Russia's low cost of energy exports to
china.
And in order to ensure the long-term sustainability of the supply of bauxite in China, China's aluminum
producers have to look for better bauxite resources in foreign countries. Russia has long-term bauxite reserves,
and in many countries have their own reserves, which guarantees the supply of the next 100 years. Therefore,
the Russian Aluminum and Chinese enterprises cooperation, but also to the development of bauxite in this
industry.
Oleg said that China is a very important aluminum market, the Russian Aluminum and China Nonferrous
Metals Industry Association signed a memorandum of understanding, which is to carry out cooperation in the
fields of research and development, technology and investment, and the establishment of a special working
group of Russian aluminum. Oleg believes that the signing of the memorandum of understanding, not only to
strengthen the relationship between Russia and China Nonferrous Metals Industry Association, but also an
important step to strengthen economic relations between China and russia.
Low price to sell is a good way to talk about the future development of China's aluminum industry, Oleg
believes that China's aluminum industry is the most needed is the technological innovation, and this is the
non-ferrous metal industry, "Twelfth Five Year Plan" requirements. But because the current price is too low,
so that enterprises can not invest in new technologies, so the main challenge is to eliminate backward
production capacity, while in Western China or in foreign countries to build a new generation of smelting
plant. In Japan, for example, 25 years ago, Japan is also due to the high price,leading to the domestic
aluminum industry into a difficult situation. And Japan's aluminum consumption is very high, mainly due to
the automotive and manufacturing demand for aluminum is very strong. Therefore, Japan's strategy is to find
the best and the lowest cost of the enterprise to carry out the shares in the world. Lower prices from those
countries to import aluminum to Japan, and then produce high value-added products in japan. This is the
global aluminum industry a good way of operation, that is, the lowest energy prices in the local production of
aluminum, and then produce high added value products and high-end products and export to the required
market. In fact, from the perspective of energy efficiency and labor costs, the production of a ton of raw
aluminum required labor costs, and production of a ton of high value-added aluminum products need to be the
same, but the former energy costs ten times higher than the latter. In addition, China is the world's largest
consumer market, so it is more suitable for the production of high-end aluminum in china.
And primary aluminum production should be chosen at the lowest price of the place. Russia because only
140000000 of the population, the market demand for terminal products is not much, but because in Siberia has
a very rich in hydropower and natural gas, so the price of natural resources is very low, but China has more
than 1300000000 people, and China has excellent technology to produce the most high-end products to supply
other countries.
Therefore, Oleg believes that Russia and China's cooperation, it should be from Russia's exports of natural
resources, including primary aluminum products to the Chinese market.
In the Chinese market, the production of high-end products and high value-added products,the supply of
domestic consumption or export to foreign countries.