Electrolytic Aluminum 2018 "capacity replacement notice" will have any potential impact?

On January 17, 2018, the official website of the Ministry of Industry and Information Technology promulgated the Notice on Implementation of Capacity Replacement by Electrolytic Aluminum Enterprises through Mergers and Acquisitions, among which three key points deserve attention: ①Explanation of the total amount: Capacity equivalent or replacement; ②Explanation of scope: The index that can be used for capacity replacement must be the capacity of the compliance project that meets the requirements of the state industrial policy and the examination and approval of investment projects; ③The statement about the time limit: from 2011 to 2017 The aluminum capacity shut down and included in the phase out announcement of aluminum production capacity indicators to be completed by December 31, 2018 capacity replacement, overdue shall not be used for replacement.

What are the potential impacts on the electrolytic aluminum industry? We think there are mainly three aspects: (1) The policy of strictly controlling the gross margin and the optimization of the stock have been strengthened and refined; (2) the scope of the index of tradeable transactions is further clarified Under the premise of "a certain total plate", the scale of new investment and construction of electrolytic aluminum project will be significantly restricted, and the industry will switch from "incremental game stage" to "stock stage." ③ Index trading will be accelerated and the industry concentration is expected to further increase .

We think the strict industrial policy is a general trend. The total amount control + stock optimization and the deep structure change in the industry are the biggest differences between the current electrolytic aluminum industry and the ever-increasing endogenous momentum that will support the pattern of the aluminum mayor.