China to cool overheated aluminium sector

Xinhua reported that China is making efforts to curb over production in its aluminum sector.

According to the Ministry of Industry and Information Technology, local governments must immediately suspend electrolytic aluminium and forbid any practices to expand production capacity in the sector. Also, local governments should cancel policies preferential to aluminium producers with regard to taxes, land usage and electricity supply.

Mr Zhu Hongren chief engineer and spokesman of MIIT said that the aluminum sector showed obvious signs of overheating in the first two months this year. The sector's profits shrank 41.8% in the first 2 months YoY due to sharp competition.

Mr Zhu attributed the surplus capacity problem to some local governments seeking quick economic growth in the first year of the 12th Five Year Plan period and some did not see the larger picture across the country. Electrolytic production of aluminium is relatively inefficient and produces high emissions.

China's aluminium output topped 15.6 million tonnes last year and production capacity was 23 million tonnes which meant only 70% of facilities were in operation. Production capacity of the sector might exceed 30 million tonnes at the end of 2015, if all the currently proposed 23 electrolytic aluminium projects with 7.74 million tonnes of capacity and CNY 77 billion of investment were finished.

Sales profit rates averaged only 3.59% in the January to November period last year though the sector reported CNY 10.44 billion in total profit. The notice was jointly issued by nine government departments including the MIIT, National Development and Reform Commission, Ministry of Supervision, Ministry of Land and Resources, Ministry of Environmental Protection, People's Bank of China among others.

(Sourced from Xinhua.com)