On December 30, 2013, the Ministry of Industry and Information Technology released the 2013 China Industrial Communications Industry Operation Report. According to the findings, since 2012, the overall capacity utilization rate for over 60,000 large and medium-sized enterprises under the National Bureau of Statistics has remained below 80%. Overcapacity has not only persisted in traditional sectors like steel and non-ferrous metals but has also spread to emerging industries such as wind power and photovoltaics, where utilization rates have dropped below 75%.
The report also analyzed the performance and future trends of the non-ferrous metals sector. It suggested that the operating conditions in 2014 would likely mirror those of 2013. While deep processing of non-ferrous metals is expected to grow rapidly, this may help stabilize the industry. However, challenges remain, including insufficient mine support, a lack of high-value products, and an unbalanced industrial structure—often referred to as the "middle big, two small" model—which is difficult to resolve quickly.
In 2013, significant steps were taken to address overcapacity. The State Council issued guidelines aimed at curbing severe overcapacity in key sectors, including electrolytic aluminum. New projects in these industries were strictly prohibited, and local governments were instructed not to approve any new capacity expansions. Additionally, the Ministry of Industry and Information Technology shut down outdated production lines across 19 industries, including electrolytic aluminum.
Despite some positive developments in the economy, overcapacity remains a major challenge. It affects a wide range of industries, with excess capacity persisting for long periods. According to data from the State Council's Development Research Center, 67.7% of surveyed companies believe it will take more than three years to absorb current excess capacity, with 22.7% estimating it could take five years or longer. This highlights the difficulty in resolving the issue in the short term.
Another critical issue highlighted in the report is the persistent "middle big, two small" industrial structure in the non-ferrous metals sector. Although output of key metals like copper and aluminum increased significantly in 2013, profit margins declined sharply. In the first ten months of the year, the industry saw a 6.8% drop in profits, with a loss ratio rising to 19.81%. Prices for major non-ferrous metals fell throughout the year, adding pressure on producers.
Looking ahead, the report suggests that while structural adjustments and growth in emerging industries may provide some relief, the non-ferrous metals sector still faces considerable challenges. Rising operational costs, weak global demand, and limited access to high-value resources are expected to keep profitability under pressure. Profits are likely to remain at 2013 levels, with no immediate signs of improvement.
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