Recent investigations in Beijing, Inner Mongolia and other regions reveal severe overcapacity in China's domestic electrolytic aluminum sector, with industry-wide losses exceeding 90%. Due to imbalanced electricity pricing policies across different enterprises and regions, unclear policies for cross-provincial capacity transfer, and lackluster support from local governments, resolving excess capacity remains fraught with difficulties.

Wang Huajun, Deputy Secretary-General of the China Nonferrous Metals Industry Association, stated that in the first quarter of 2014, the CEIC Nonferrous Metals Industry Warning Index stood at 73.3, a drop of 6.7 points from the previous quarter, continuing to operate in the "light blue" zone. It is preliminarily judged that overcapacity remains a key issue facing the industry, particularly in the electrolytic aluminum sector.

Statistics from the China Nonferrous Metals Industry Association, the National Bureau of Statistics and other institutions show that domestic electrolytic aluminum output in 2013 was 2205 ten thousand tons, accounting for 68.9% of the national total capacity of 3200 ten thousand tons. Capacity utilization has fallen below 70%, indicating severe overcapacity.

Zhao Xiufu, Deputy Director of the Research Office of Aluminum Corporation of China, told reporters that severe overcapacity in electrolytic aluminum has made the country a major victim. Currently, idle electrolytic aluminum capacity nationwide amounts to 1000 ten thousand tons, representing idle assets worth 1200 hundred million yuan, resulting in significant waste of social wealth. Furthermore, vicious competition among enterprises may lead to the elimination of specialized electrolytic aluminum producers, potentially causing the industry to regress.