China aluminium smelters to face cutbacks in H2 2010: Minmetals

The Chinese aluminium market is facing a 1.26 million mt surplus in 2010
that should lead to production cutbacks in the second half of the year,
according to estimates by China Minmetals. 

     "Personally I don't think the Chinese domestic market could absorb such a
big surplus for a second year," Wang Feihong, senior analyst at China
Minmetals Non-Ferrous Metals Co, said Wednesday.

     "The calculation means that we would see a production cutback in the
second half of this year. That's just my personal prediction," he said.

     Speaking at CRU's 15th world aluminium conference in Oslo, Wang said he
expected that the 1.26 million mt surplus faced by the country's aluminium
market would occur despite a strong growth rate in aluminium consumption
forecast this year.

     The analyst said aluminium demand still looked "healthy" across
all sectors in China, and Minmetals forecast an 18% growth in aluminium
consumption to 16.34 million mt in 2010.

     "In history, there was a strong rebound of aluminium consumption after
each financial crisis. There is no exception this time," he said.

     Wang pointed to a tightness in the aluminium scrap market that is
contributing to primary aluminium consumption growth. He said secondary alloy
producers, who usually rely on scrap, now tended to use primary aluminium and
the price differential between the primary and scrap metal has been falling
since early 2010.

     China's primary aluminium output is forecast to grow to just above 18
million mt this year, Wang said, adding: "Definitely, we will see another
great leap forward in this year for production.".

     Speaking to Platts on the sidelines of the conference, Wang said that the
lower aluminium price may also lead to production cutbacks.

     Aluminium for three-months delivery on the London Metal Exchange closed
at $1,942/mt Wednesday.

     "In the Chinese domestic market, the price is even weaker than the LME,
which really hurt Chinese smelters," Wang said, adding that if the lower
prices are maintained at the same level for a long time, they will "squeeze
the profitability of Chinese smelters and then lead to production cutbacks."
--Agnieszka Troszkiewicz, a_troszkiewicz@platts.com

Copyright and Exemption Declaration :¢ÙAll articles, pictures and videos that are marked with "China Aluminum Network" on this website are copyright and belong to China Aluminium Network (www.alu.com.cn). When transshipment, any media, website or individual must list the source from "China Aluminium Network (www.alu.com.cn)". We seek legal actions against anyone that disobey this. ¢ÚArticles that marked as copy from others are for transferring more information to readers, do not represent or endorse their opinions or accuracy and reliability. When other media, website or individuals copy from our website, must keep the source. Anyone that changes the articles' sources will hold the responsibilities for copyright and law problems. We also seek legal actions against anyone that disobey this. ¢ÛIf any articles copied by our website concern the copyright and other problems, please contact us within one week.