China's electrolytic aluminum output expects to grow 14 percent in 2007

China's electrolytic aluminum output is estimated to hit 10.5 million tons in 2007, up about 14 percent from this year, said China's State Development and Reform Commission (SDRC). A latest report published by the SDRC said the supply and demand of electrolytic aluminum in the domestic market will maintain a stable level in 2007. The domestic electrolytic aluminum consumption is expected to grow 13 percent, reaching 9.6 million tons in 2007, the report said.

Since 2001, China's domestic demand for electrolytic aluminum increased at a speed of one million tons per year, which gave rise to blind development and over-investment of the industry.

    The overheating of the industry makes the energy and resources strain even worse. As a high energy consumption industry, every ton of electrolytic aluminum costs 15,000 kw/h of electricity. In 2003, four percent of total consumption of electricity was used in the sector.

    In 2005, China, as the top producer of electrolytic aluminium in the world, saw a general loss in the industry due to the over-investment. To curb the over-investment of the sector, the SDRC report released a series of measures in the industry. Tariff of 15 percent will continue to be imposed on the export of the electrolytic aluminum, the report said. From Nov. 1, 2006, the Chinese government raised the export tariff of the electrolytic aluminum from 5 percent to 15 percent, hoping to contain the export of the electrolytic aluminum.

    The SDRC expected this measure to further contain the export in 2007, adding it will probably bring about a decrease in the electrolytic aluminum prices in domestic market in 2007. The SDRC also said it will encourage the merger of aluminium enterprises through share swap and acquisition. Related departments will continue to guide the investment and operation in the electrolytic aluminium industry, with stricter supervision to curb over-investment, the SDRC said.

    The report said that China's electrolytic aluminum output in 2006 is expected to stand at 9.2 million tons, a year-on-year rise of 17.8 percent. Domestic electrolytic aluminum producers have become more profitable this year. It attributed this profit increase to the price up of electrolytic aluminum as well as the price drop of alumina, one of the most important raw materials for electrolytic aluminium production.

      In the latter half of 2006, the prices of the alumina fell from 6,000 yuan per ton to 2,400 yuan per ton, which has greatly reduced the production cost in the electrolytic aluminum industry, the SDRC explained. The average price of electrolytic aluminum in domestic market rose 10 percent to about 21,000 yuan (2,685 US dollars) per ton this year, SDRC figures show.

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