Aluminum Oxide Production Capacity to Step into Peak Season in Q1 2015

The latest data shows of the National Bureau of Statistics on April 15:

4.8 million tons of aluminum oxide production in March, increases with year-on-year growth of more than 15.4% with last year. 1397 million tons of aluminum oxide production from January to March, increases more than 15.3% with last year too. Analysts say this aluminum  oxide production will grow into the peak this year, the production capacity of 5 million tons, with year-on- year growth of more than 47% from last year's  3.4 million tons.

The electrolytic aluminum demand will grow faster than the aluminum oxide supply growth in the second half of 2014. The domestic aluminum oxide supply becomes tight and new aluminum capacity is greatly increased this year. Analysts expect that 2015 may be the last peak of new electrolytic aluminum production capacity. New electrolytic aluminum production capacity is expected to be 4.6 million tons this year, and will be predicted to drop to 3.5 million tons in 2016. With the new capacity limits, the new capacity of the aluminum oxide will gradually slow down.

In 2014, the relevant data shows that China's aluminum oxide production is 51.61 million tons in total, increases 10.7% over last year. Especially in the second half of 2014, with the new capacity increasing, New demand for aluminum oxide is on the rise. On the one hand, the new aluminum oxide production releases, on the other hand, some enterprises restore some previous spare capacity. As the slowing down of the electrolytic aluminum oxide production, and the reduction of the estate in demand, analysts expect the future growth of aluminum oxide production will drop to 5% or so.

The price of the aluminum oxide continues to be restricted by electrolytic aluminum price, and the current price remains low. Analysts also think little upside for prices of the aluminum oxide price in the first half of this year. And the electrolytic aluminum enterprises loss will be continued, which will cause the shortening of the alumina stock cycle, and the aluminum oxide will be increased than expected. At last, these stocks will suppress the aluminum oxide price. As the new electrolytic aluminum production capacity is put on the market in the second half of this year, the future demand is expected to support the aluminum oxide price.