Aluminum demand in China set to double over decade - XinRen

According to XinRen Aluminum Holdings Limited, aluminum demand in China, the world’s largest consumer and producer will more than double over the next decade, eliminating a local surplus and boosting prices.

Mr Liang Hongbo ED of XinRen Aluminum said that consumption may gain 15% per year over the next 10 years down from 17% to 20% per year over the previous 10. Coupled with slowing supply growth, this should bring the Chinese market close to balance. XinRen makes 275,000 tonnes of ingots and 50,000 tonnes of plates a year.

Mr Liang’s outlook highlights the nation’s increasing demand for commodities including aluminum which may help trim a global surplus that’s estimated by researcher Brook Hunt at 1.4 million tonnes this year. In April, China’s government ordered a halt to new aluminum projects to combat overcapacity and wastage.

He said that demand from the transportation and automobile industries and infrastructure projects are expected to remain strong. This should send aluminum prices back to pre-Lehman levels of more than USD 3,000 per tonne referring to Lehman Brothers Holdings Inc which failed in 2008 sparking a global recession.

According to research group Harbor Intelligence, primary aluminum production in China increased 78% in the 5 years to 2010 and may grow 15% to about 19 million tonnes this year. Output climbed to a monthly record of 1.59 million tonnes in June.

The Ministry of Industry and Information Technology said recently that China will suspend approval of new projects immediately. The government also aims to shutter 619,000 tonnes of outdated capacity by the yearend.

Mr Liang Lijuan Beijing based analyst at Cofco Futures Company said that the aluminum industry has been hurt in the past by the rapid expansion of smelting capacity in China. All this is set to change as the government takes steps to curb overcapacity and restrain energy intensive industries.

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