1. CMF Research Center Xu Hongping/Xu Shiwei 2016.05.19 Qingdao CMF Aluminium industry analysis under supply-side reform

2. Part 1 Introduction of aluminium industry chain Aluminium: Chinese market leads global aluminium industry 2

3. Aluminium industry chain—bauxite 3

4. 4

5. Output in China and around the world—with growth mostly contributed by China 5

6. Output growth outside China is minor (annually) 6

7. Global balance-LME aluminium price (annually) 7

8. Global and Chinese aluminium consumption 8

9. Global and Chinese aluminium consumption growth 9

10. China drags down global aluminium consumption (1,000t %) Global aluminium premium shows Asia is weak in consumption (USD/t) India is unlikely to replace China in aluminium consumption China-Outside China aluminium consumption and growth (%) Global consumption 10

11. Operating rate of aluminium products in China （ % ） Growth in the fixed investment in Chinese real estate continues to drop （ % ） Chinese major aluminium consumption growth annually (%) Growth in Chinese aluminium exports limited （ USD/t 10,000t ） Aluminium consumption in China 11

12. Balance outside China—LME aluminum price (quarterly) 12

13. Balance in China—Price (quarterly) 13

14. 资料来源：招商期货研究所 14 201020112012201320142015E2016E2017E Supply and demand Outputkt 4227546171481995061853438573416116463075 Consumptionkt 4082544663475275011353761558635744857590 Balancekt 14501508671505-323147837165485 Stock kt860710114107861129110968121471171611817 LME+comexkt42754979521054584210300 IAI 139515031255116914081760 Stock consumption days kt7783 82747992101 Price Average spot price $21732395201918461866160015701650 Global balance

15. 201020112012201320142015E2016E2017E Supply and demand Outputkt 1730019800225002490028060311903112234234 Consumptionkt 1672919479215142394127945301013150032904 Net exports 400430-10-254-13700500 Balancekt 171-109996121312840-880700 Stock kt280126923688490161698554766911165 Stock consumption days kt615063758511297100 Price Average spot price $1571516866156231449113474121791150011000 Balance in China 15

16. Part 2 Introduction of aluminium cost Al: a reverse in dropping cost 16

17. Chinese private power-backed electrolytic aluminium cash cost and total cost (RMB/t) Chinese electrolytic capacity distribution and cash cost distribution (RMB/t) Aluminium cost—Energy-driven 17

18. Chinese electrolytic aluminium capacity distribution and electricity charge (RMB/kWh) Aluminium cost—Energy-driven 18

19. Chinese alumina production cost with Bayer process Chinese coal and electricity cost Aluminium cost—Energy-driven 19

20. Part 3 Affects of supply-side reform on aluminium industry Aluminium: mismatch of demand and supply 20

21. Period2013201415Q115Q215Q315Q42016Q12016Q216Q316Q417Q1 Running capacity2450.12974.43141.63161.603193.603062.603064.103161.103250.603382.803523 Capacity alteration486.9524.3167.22032-1311.59789.50132.2140.5 Electrolytic aluminium capacity and growth 21

22. Status quo of aluminium industry: mismatch of demand and supply 22

23. Aluminium supply expectation: mismatch continues 23

24. CompanyAluminium plantLocation Capacity resumption Running capacity Total capacity Resumptio n date Electricity charge Note Chongqing Energy Qineng Aluminium Chongqing533 1601 Private power 0.28 Resumed production in December after maintenance Zengshi Huangguoshu Aluminium Guizhou4815 1602 3.3Limited resumption China GuodianHuangge XinyeQinghai5475816030.285-0.38 Resumed production in March and then carried out maintenance in 40,000t capacity, meaning only 10,000t of capacity was added China Guodian Ningdong Aluminium Ningxia73210016040.25-0.26Saw output in June ZhaofengQinghai1205016060.31Saw output in August Nanping Aluminium Guizhou411251605-160700.35Saw output in July Bosai GroupAba AluminiumSichuan7162216Q2 0.28-0.3 估 Estimates Taiyuan Donglv Aluminium Shanxi100 16Q3 0.3 估 Resuming production in batches China Guodian Ningdong Aluminium 1839 16Q3 Estimates Yunnan Metallurgical Group Qujing Aluminium Yunnan28103816Q3 No plan Dongxing Aluminium JiayuguanGansu2511013516Q3 Estimates Dongxing Aluminium Longxi Aluminium Gansu12233516Q30Estimates 137322506 Supply growth—resumption: limited improvements on mismatch 24

25. Company Aluminium plant LocationNewly added Original capacity Operation date Jinjiang GroupJinlian Inner Mongolia 107016Q1 Baise Mining Guangxi2016Q1 Xinfa GroupXinfa HuayuShandong1912016Q1 Chinalco Huaze Aluminium Power Shanxi73516Q2 potential postpone Jiarun GroupJiarunXinjiang154516Q2 West Mining Baihe Aluminium Qinghai5101602 potential postpone Baise Mining Guangxi3216Q2 Weiqiao Group Weiqiao Aluminium Power Shandong2550016Q2 Xinfa GroupXinfa HuayuShandong1913916Q3 Weiqiao Group Weiqiao Aluminium Power Shandong2552516Q3 Zengshi Group Tianshan Aluminium Xinjiang2011016Q4 Weiqiao Group Weiqiao Aluminium Power Shandong2555016Q4 Xinfa GroupXinfa HuayuShandong1915816Q4 Baise Mining Kuangkuang Aluminium Guangxi10 16Q4 Heaven Dragon Mining Xinjiang101516Q4 Meixin Industry Investment Meixin Investment Shaanxi33 17Q1 Jiarun GroupJiarunXinjiang306017Q1 Total 214 Supply growth—new operation: limited improvements on mismatch 25

26. Global electrolytic capacity and movements 26

27. Raw material bottleneck: alumina supply growth slows down 27

28. Raw material bottleneck: limited growth in operating rate 28

29. Aluminium plant LocationNew capacity Original capacity Running capacity Operation date Huaxing Aluminium Shanxi100120220160408 Vietnam mine II Vietnam6560125 1603-1604 original plan1601 delayed Weiqiao Indonesia Indonesia1000 1603 Henan Subsidiary Henan160602201608 Zhongzhou Subsidiary Henan502302801602 plans to postpone Heungkong Wanji Henan60140200 The fourth stage of the project is unsettled Total 535 Raw material bottleneck: limited new alumina capacity 29

30. CompanyAluminium plantLocation Capacity cut Total capacity Running capacity Date of capacity cut Qixing High- tech Qixing AluminiumShandong245026160101 down by 22,000tof output in January Chinalco Chinalco Shandong Shandong501801301601 down by 40,000t of output in January Qiya AluminiumQizheng ChemicalGuizhou3010070 1601 reduction carry full maintenance on Feb 4, resumed 700,000 on Feb 15, plans to see output of 20,000t in ChinalcoChinalco ShanxiShanxi602801901601 Xinfa GroupGuangxi XinfaGuangxi203002161601 State Power Investment Corporation Shanxi AluminiumShanxi40280240160125 Jinjiang GroupXingan ChemicalShanxi40280240 1511 reduction from 230,000t to 200,000t,1601 resume full capacity Weiqiao Group Weiqiao Aluminium Power Shandong100115010001601 Wanji Aluminium Henan6014080 Datang EnergyXinliang Recycle Inner Mongolia 5010001605 suspension 1512 resumption Xinfa GroupShiping XinfaShandong1006003001511 down by 1 million ton in early this year ChinalcoChinalco HenanHenan160225 1512 suspension160 new construciton1608 go into operation Jinjiang Group Kaiman Aluminium Henan40200160 1511 中旬减产 40 技术升级 约 3-4 月时间技改后复产 Bosai GroupBosai MiningChongqing308050 1511 中旬减产 30 Chinalco Chinalco Zhongzhou Henan230 1511 Total 804 Raw material bottleneck: over half of alumina capacity resumed 30

31. 201120122013201420152016 Total inventory68.981.3129126.212263 Up/down334.439.375.770.5-3.8 Supply-demand mismatch: low inventory 31

32. Supply-demand mismatch: inventory lower than expected 32

33. Global alumina capacity and movements 33

34. Status quo of aluminum industry: growing cost 34

35. 20152016E2016Q12016Q2201601201602201603201604201605201606 AluminaOutput5642.558001343.81437459425459.8472480485 Net imports420480125.39949.337393532 Apparent consumption 6062.562801469.11536508.3462498.8507512517 Real consumption 6117622014441522488460496492517513 Demand- supply balance -54602614202315-54 Electrolyt ic aluminiu m Output31223175736.8777249.1234.7253251264262 Net imports1520.3 0.1 Apparent consumption 31373177737.1777.3249.2234.8253.1251.1264.1262.1 Stock66.373.23585.392.873.2604035 Stock change6.9-38.2197.5-19.6-13.2-20-5 Consumption30803270730.2815.5230.2227.3272.7264.3284.1267.1 Same period last year 632.51795.6225.66169.65237.2247.48269.8278.2 YOY15.4%2.5%2.0%34.0%15.0%6.8%5.3%-4.0% Balance57-93 35 Supply and demand detailed statement

36. Part 4 Affects of supply-side reform on price 36 In near term, price rises (from January to March): demand and supply mismatch is unlikely to improve In mid-term, fall back from high levels (from March to June): supply growth encounters consumption fall

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