Some insiders believe that the direct reason for this reduction in production is that the export of bauxite export policies in Indonesia has increased the cost of bauxite imports in China. However, another major reason is that in the context of sluggish domestic demand, the country has not stopped the pace of crazy expansion.

It is reported that in the first half of 2007, due to the surge in new construction projects in some industries, the National Development and Reform Commission and other five departments have issued special notices, requiring all localities to comprehensively clean up new projects of more than 100 million yuan, and the alumina industry has even focused on cleaning up one of the industries. In the first half of 2008, due to overcapacity problems, alumina companies have cut production, but it is still unable to boost market prices. The direct impact of the surge in domestic alumina production is the reduction in alumina imports and the increase in bauxite imports. When domestic resources could not support domestic demand, alumina producers continued to expand their production capacity without sufficient raw material supply, which led to a significant increase in import dependence, which directly led to an increase in the price of imported bauxite and a fall in alumina prices. Under double pressure, most factories are unbearable and forced to cut production.

In just a few years, the alumina industry has faced the problem of reducing production in the whole industry due to overcapacity and falling prices. Perhaps this is that the price law is playing a huge regulatory role, guiding the unbalanced supply and demand of commodities to a new balance.

Overcapacity will inevitably have a very negative impact on the development of the industry. There are many reasons for the overcapacity problem. First, the investment and financing system is imperfect. Enterprises ignore market conditions, see profits and blindly invest in, etc. Of course, there are also soft constraints such as long-term low prices of land, energy, and manpower. . Despite these force majeure constraints, enterprises can first accurately evaluate and predict the future supply and demand situation of goods and their own competitiveness before making a decision to expand production, which can greatly avoid their own losses.

However, compared with overcapacity, the lack of demand has hit the alumina industry's earnings even more. The reduction in production can only slow down the excess of alumina, but it is unable to recover the downturn in alumina prices. Therefore, if you only want to save the hope of saving the market, or eventually lose. Repeated expansion and production reduction in recent years is the best proof.

However, boosting market demand is an intractable issue compared to production cuts. The market is complex, the impact of the global economic pattern, the development of related industries, etc. all affect the alumina market. The driving force to boost market demand is more from macroeconomic policies and market economy. The development of alumina upstream and downstream and the strength of aluminum prices also affect the alumina market. Therefore, as a company, the best way to avoid risks is to objectively and scientifically analyze the market situation, not blindly follow, and make decisions that are in line with its own strength and market development. In this way, we can take the initiative in a rapidly changing market.

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