On December 30, 2013, the Ministry of Industry and Information Technology released the 2013 China Industrial Communication Industry Operation Report. According to the findings, since 2012, the overall capacity utilization rate among 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 are even lower—often below 75%.
The report analyzed the development trends of the non-ferrous metal industry, noting that 2014’s performance would likely mirror that of 2013. While deep processing of non-ferrous metals is expected to grow rapidly, supporting the industry's stability, several structural challenges remain. These include a lack of mine support, limited high-value products, and an imbalanced industrial structure characterized by "a large middle and small ends," which is difficult to resolve in the short term.
In 2013, the government intensified efforts to address overcapacity, particularly in electrolytic aluminum. New regulations were introduced, prohibiting the construction of new production capacity in severely overcapacity sectors. Local governments and departments were instructed not to approve any new projects, and relevant agencies were required to withhold services such as land allocation, energy assessments, environmental reviews, and credit support for these industries. As part of this initiative, outdated production lines across 19 industries—including electrolytic aluminum—were shut down.
Despite some positive economic shifts, overcapacity remains a significant challenge. It affects a wide range of industries, with high levels of excess capacity that have persisted for years. A recent survey of 3,545 companies by the State Council’s Development Research Center found that 67.7% of firms believe it will take more than three years to absorb current excess capacity, with 22.7% expecting five years or longer. This highlights the difficulty in resolving the issue in the near future.
The report also pointed out that the "big middle, two small" pattern—where mid-level processing dominates but upstream and downstream segments are weak—remains a persistent problem. In the non-ferrous sector, production has remained relatively stable, with output of key metals rising significantly. However, prices have declined sharply, and profit margins have narrowed. In the first ten months of 2013, the industry recorded a profit of 143.8 billion yuan, a 6.8% drop year-on-year. The profit margin fell to 3.39%, and losses increased, reflecting ongoing operational difficulties.
Looking ahead, the outlook for 2014 remains uncertain. While demand is unlikely to change significantly, the push for strategic emerging industries and structural reforms may help drive growth in deep processing. However, factors such as rising domestic costs, fluctuating global commodity prices, and limited access to raw materials will continue to pressure the industry. Profits are expected to remain around 2013 levels, with long-term challenges still looming.
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