The Ministry of Commerce has decided that since August 22, all imported alumina will be subject to an 8% tariff and a 17% VAT. Analysts pointed out that in the short term, the cancellation of the trade tax incentives is a potential negative factor; but in the long run, the implementation of this policy will lead to a weakening of domestic demand for alumina, and the reduction of alumina prices will make the electrolytic aluminum market in 2006 expected. Get rid of the current downturn.
The Ministry of Commerce recently issued a notice, deciding that since August 22, alumina (including aluminum ore), ferroalloy ore, etc. will be included in the catalogue of prohibited trade in processing trade, that is, all imported alumina will be treated as 8%. Tariff and 17% VAT. Previously, alumina imported through the processing of incoming materials was exempt from import tariffs of 8%.
According to industry insiders, the amount of alumina imported by processing trade last year has already accounted for half of the total amount of imported alumina, and electrolytic aluminum exported through processing trade accounts for 80% of the total amount of exported electrolytic aluminum. The policy of prohibiting the processing of alumina processing is mainly to limit the excessive export of electrolytic aluminum. After all, electrolytic aluminum is a high-energy, high-pollution product, and the elimination of alumina processing trade can reduce a large portion of electrolytic aluminum exports.
Wang Zhongjing, an aluminum industry analyst at Xinhua News Agency, said that in the short term, the cancellation of tax incentives for alumina processing trade is a potential negative factor. This will further damage the domestic electrolytic aluminum market, and the living conditions of electrolytic aluminum enterprises will further deteriorate.
Wang Zhongjing further pointed out that the abolition of the alumina tariff preferential policy, the electrolytic aluminum industry may have a full-scale profit decline or even loss. The implementation of this policy is estimated to be the state's intention to control the import of aluminum, which will drive the domestic alumina to increase due to the small amount of alumina, forming a balance between the Chinese and foreign aluminum markets, and thus the linkage effect from direct regulation of alumina to indirect regulation of electrolytic aluminum. .
In addition, Wang Zhongjing also said that in the long run, the implementation of this policy will prompt the domestic demand for alumina to weaken, and the price of alumina may also fall from the current high level due to the decrease in demand. The reduction in alumina prices will be a signal that the electrolytic aluminum industry has bottomed out and entered a new round of boom cycle. From this perspective, the domestic electrolytic aluminum market is expected to break away from the current downturn in 2006.
Chen Peng, an analyst at United Securities, believes that it is a matter of policy and policy to remove the 8% import tariff and 17% VAT from the alumina processing trade. The reason why the delay has not been issued may be the government’s concern about electrolytic aluminum. The industry has been overwhelmed. In 2004, China has reduced the tax rebate rate for exporting aluminum ingots from 15% to 8%. In 2005, it also canceled the tax rebate and imposed a 5% export tariff. However, in the first half of this year, aluminum ingot exports still increased by 40%. Since 80-90% of China's aluminum ingot exports have passed processing trade, in order to curb the export of high-energy-consuming electrolytic aluminum, the country must start from adjusting the tax incentives for processing trade.
Chen Peng pointed out that after the cancellation of the two tax concessions, the cost of imported alumina will increase by 25%, and the export cost of equivalent aluminum will increase by about US$210. At present, the gross profit margin of alumina processing trade has been very meager. Taking Jiaozuo Wanfang as an example, it is only 1.5%. The cancellation of tax incentives will definitely hit domestic electrolytic aluminum exports. The decrease in exports has led to an increase in domestic resources, which will put pressure on domestic aluminum prices, but it is a big plus for international aluminum prices. In fact, after the gradual cancellation of the export tax rebate for aluminum ingots in 2004, the situation of Shanghai aluminum weak London aluminum has become very obvious.
Chen Peng said that although the current situation of the electrolytic aluminum industry has fallen to the bottom, it is still too early to say that the industry is about to recover. We believe that the inflection point of the electrolytic aluminum industry must consider the price of alumina and electrolytic aluminum. Based on the comprehensive analysis, we believe that the investment opportunities in the electrolytic aluminum industry during the year are not large. In the first quarter of this year, the actual loss of domestic electrolytic aluminum enterprises reached 80%. According to the price trend of alumina and electrolytic aluminum, we judged that the situation in the second quarter may be even worse.
The industry generally expects alumina prices to fall in the second half of 2005 to the first half of 2006, which is the main reason why everyone thinks that the electrolytic aluminum industry will bottom out. According to the National Bureau of Statistics, China's alumina production in the first half of the year increased by 17% year-on-year, but only increased by 9%.
Industry experts pointed out that for electrolytic aluminum enterprises, in order to avoid losses as much as possible, the realistic choice is to increase the utilization rate of existing production capacity, reduce the power consumption per unit of aluminum products through technological innovation, and pass the export with international alumina. Establish a long-term contract to fix the price of alumina.
According to the information provided by United Securities, China imported 3.67 million tons of alumina from January to June, an increase of 28.8% year-on-year. The import price fluctuated between 4750-4950 yuan/ton. In the first half of the year, although China has substantially increased its purchases in the international market, it has not caused a sharp rise in prices. The main reason is that the slowdown in European economic growth and the rise in electricity costs have led to a decline in the production of electrolytic aluminum in foreign countries, which has alleviated the demand pressure on alumina. According to IAI statistics of the International Aluminium Association, the world's primary aluminum production increased by 2% in the first half of the year, but deducted by 4.1%.
In 2004, China's alumina production was 7 million tons, and more than 90% of its production capacity was concentrated in Chinalco. In 2005, Chinalco's new project capacity was 1.85 million tons, and other companies added a total of about 1.6 million tons. Although the national alumina production capacity is expected to reach 10 million tons by the end of 2005, there are not many new projects that can be put into production before the end of the year. It is estimated that the total annual output of alumina will be around 8 million tons. According to the 18% increase in primary aluminum production for the whole year, alumina imports must also increase by 1.32 million tons this year, accounting for about 50% of the world's new production (excluding China). Due to the high dependence on imports, the possibility of a staged and small shortage of alumina in the second half of the year still exists. In general, China's annual supply and demand of alumina is basically balanced, and the possibility of a sharp drop in prices is unlikely.
The Ministry of Commerce recently issued a notice, deciding that since August 22, alumina (including aluminum ore), ferroalloy ore, etc. will be included in the catalogue of prohibited trade in processing trade, that is, all imported alumina will be treated as 8%. Tariff and 17% VAT. Previously, alumina imported through the processing of incoming materials was exempt from import tariffs of 8%.
According to industry insiders, the amount of alumina imported by processing trade last year has already accounted for half of the total amount of imported alumina, and electrolytic aluminum exported through processing trade accounts for 80% of the total amount of exported electrolytic aluminum. The policy of prohibiting the processing of alumina processing is mainly to limit the excessive export of electrolytic aluminum. After all, electrolytic aluminum is a high-energy, high-pollution product, and the elimination of alumina processing trade can reduce a large portion of electrolytic aluminum exports.
Wang Zhongjing, an aluminum industry analyst at Xinhua News Agency, said that in the short term, the cancellation of tax incentives for alumina processing trade is a potential negative factor. This will further damage the domestic electrolytic aluminum market, and the living conditions of electrolytic aluminum enterprises will further deteriorate.
Wang Zhongjing further pointed out that the abolition of the alumina tariff preferential policy, the electrolytic aluminum industry may have a full-scale profit decline or even loss. The implementation of this policy is estimated to be the state's intention to control the import of aluminum, which will drive the domestic alumina to increase due to the small amount of alumina, forming a balance between the Chinese and foreign aluminum markets, and thus the linkage effect from direct regulation of alumina to indirect regulation of electrolytic aluminum. .
In addition, Wang Zhongjing also said that in the long run, the implementation of this policy will prompt the domestic demand for alumina to weaken, and the price of alumina may also fall from the current high level due to the decrease in demand. The reduction in alumina prices will be a signal that the electrolytic aluminum industry has bottomed out and entered a new round of boom cycle. From this perspective, the domestic electrolytic aluminum market is expected to break away from the current downturn in 2006.
Chen Peng, an analyst at United Securities, believes that it is a matter of policy and policy to remove the 8% import tariff and 17% VAT from the alumina processing trade. The reason why the delay has not been issued may be the government’s concern about electrolytic aluminum. The industry has been overwhelmed. In 2004, China has reduced the tax rebate rate for exporting aluminum ingots from 15% to 8%. In 2005, it also canceled the tax rebate and imposed a 5% export tariff. However, in the first half of this year, aluminum ingot exports still increased by 40%. Since 80-90% of China's aluminum ingot exports have passed processing trade, in order to curb the export of high-energy-consuming electrolytic aluminum, the country must start from adjusting the tax incentives for processing trade.
Chen Peng pointed out that after the cancellation of the two tax concessions, the cost of imported alumina will increase by 25%, and the export cost of equivalent aluminum will increase by about US$210. At present, the gross profit margin of alumina processing trade has been very meager. Taking Jiaozuo Wanfang as an example, it is only 1.5%. The cancellation of tax incentives will definitely hit domestic electrolytic aluminum exports. The decrease in exports has led to an increase in domestic resources, which will put pressure on domestic aluminum prices, but it is a big plus for international aluminum prices. In fact, after the gradual cancellation of the export tax rebate for aluminum ingots in 2004, the situation of Shanghai aluminum weak London aluminum has become very obvious.
Chen Peng said that although the current situation of the electrolytic aluminum industry has fallen to the bottom, it is still too early to say that the industry is about to recover. We believe that the inflection point of the electrolytic aluminum industry must consider the price of alumina and electrolytic aluminum. Based on the comprehensive analysis, we believe that the investment opportunities in the electrolytic aluminum industry during the year are not large. In the first quarter of this year, the actual loss of domestic electrolytic aluminum enterprises reached 80%. According to the price trend of alumina and electrolytic aluminum, we judged that the situation in the second quarter may be even worse.
The industry generally expects alumina prices to fall in the second half of 2005 to the first half of 2006, which is the main reason why everyone thinks that the electrolytic aluminum industry will bottom out. According to the National Bureau of Statistics, China's alumina production in the first half of the year increased by 17% year-on-year, but only increased by 9%.
Industry experts pointed out that for electrolytic aluminum enterprises, in order to avoid losses as much as possible, the realistic choice is to increase the utilization rate of existing production capacity, reduce the power consumption per unit of aluminum products through technological innovation, and pass the export with international alumina. Establish a long-term contract to fix the price of alumina.
According to the information provided by United Securities, China imported 3.67 million tons of alumina from January to June, an increase of 28.8% year-on-year. The import price fluctuated between 4750-4950 yuan/ton. In the first half of the year, although China has substantially increased its purchases in the international market, it has not caused a sharp rise in prices. The main reason is that the slowdown in European economic growth and the rise in electricity costs have led to a decline in the production of electrolytic aluminum in foreign countries, which has alleviated the demand pressure on alumina. According to IAI statistics of the International Aluminium Association, the world's primary aluminum production increased by 2% in the first half of the year, but deducted by 4.1%.
In 2004, China's alumina production was 7 million tons, and more than 90% of its production capacity was concentrated in Chinalco. In 2005, Chinalco's new project capacity was 1.85 million tons, and other companies added a total of about 1.6 million tons. Although the national alumina production capacity is expected to reach 10 million tons by the end of 2005, there are not many new projects that can be put into production before the end of the year. It is estimated that the total annual output of alumina will be around 8 million tons. According to the 18% increase in primary aluminum production for the whole year, alumina imports must also increase by 1.32 million tons this year, accounting for about 50% of the world's new production (excluding China). Due to the high dependence on imports, the possibility of a staged and small shortage of alumina in the second half of the year still exists. In general, China's annual supply and demand of alumina is basically balanced, and the possibility of a sharp drop in prices is unlikely.
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