Chalco warns of lost production after capacity is cut at aluminium

Aluminum Corp of China Ltd, the nation's biggest producer, has said it may lose 30,000 metric tons of output after it halted some capacity at two ventures in Shanxi Province because of a power shortage.

Shanxi Huaze Aluminum & Power Co suspended 25 percent of its 280,000-metric-ton annual capacity as of July 18, and Shanxi Huasheng Aluminum Co stopped 22 percent of its 220,000-ton capacity, Chalco, as the company is known, said.

The estimated loss "is too small to ease a supply glut in China," Li Rong, an analyst at Great Wall Futures Co, said in Shanghai. Aluminum futures in London may have priced in a bigger production loss, he said.

Aluminum jumped to a record US$3,380.15 a ton on July 11 after China's producers pledged to cut output by as much as 10 percent by the end of September to help ease a nationwide power shortfall, Bloomberg News said.

The Shanxi government won't want too great a cut in output because that would reduce tax revenue.

Aluminum has declined 10 percent from the July 11 record in London as higher inventories offset concerns about a Chinese production cut. It was little changed at US$3,031 a ton at 3:15pm Hong Kong time.

China's production of aluminum may increase to 15.5 million tons this year from 12.6 million tons in 2007, outpacing demand of 15 million tons, CRU International Ltd said in October.

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