Electrolytic Aluminum Price Supposed to Rise

China's price of electrolytic aluminum is expected to rise, caused by snow disaster in its southern areas early this year.

The heavy snowfalls from late January to early February suspended primary aluminum capacity of about 1 million tons, accounting for seven percent of China's total, according to the latest statistics.

Statistics show that China's domestic aluminum price has risen by 500 yuan/ton to 18,500 yuan/ton over the past week.

According to aluminum companies unaffected by the snow disaster, the rise of aluminum price will not last long. Rising production cost including the price of electricity may offset the benefits brought by the rise of electrolytic price to aluminum companies.

But industrial insiders said that, in a long term's view, China's electrolytic aluminum production might still stay in an oversupply situation.

China's electrolytic aluminum capacity totaled 12 million tons in 2006, with output near 10 million tons. It consumed 8.79 million tons of aluminum in the year, slightly lower than the domestic supply. Supply met demand through export.

Changjiang Securities predicted that China's electrolytic aluminum capacity was expected to top 14 million tons by the end of 2007 and will reach 17 million tons by 2010.

Insiders pointed out that, despite the huge domestic demand for electrolytic aluminum in the coming two years boosted by China's strong economic growth, the rapidly released capacity will lead to oversupply on the market.

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