China aluminum stocks seen at 1 million tones to 2 million tonne

Mr Wen Xianjun vice chairman of the China Nonferrous Metals Industry Association says that China is estimated to have stocks of 1.2 million tonne to 1.5 million tonnes of aluminum.

Mr Wen estimate was higher than the 800,000-1 million tonnes figure given by many smelter officials and traders. He said that producers have been rebuilding stocks in the H2. He added that restocking was because of expectations of higher aluminum prices in the future.

Mr Wen said that he expected aluminum prices to rise 2010 as production costs increased. Costs will be the main supportive factor for prices.

High energy costs were limiting profits at power hungry smelters, even though aluminum prices SAFc3 had risen by a third so far this year. Power fees made up about 42% of smelting costs compared with about 25% at overseas smelters.

He said that a central government scheme to allow some aluminum smelters to buy electricity directly from power plants would reduce fees but most smelters had yet to settle such agreements.

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