China Warns of Excessive Alumina and Aluminium Production

SHANGHAI (Interfax-China) -- China's National Reform and Development Commission has warned of excessive production from the country's primary aluminium and alumina sector, and excessive investment growth in the lead and zinc smelting sector.

China's primary aluminium and alumina sector registered the highest production growth out of all base metals in the first 10 months of this year, up 34.6% year-on-year.

Investment in the country's lead and zinc smelting sector reached RMB 7.95 billion ($1.08 billion) in the first nine months of this year, expanding 57.7% from the same period last year, while investment in the domestic aluminium and alumina smelting sector stood at RMB 21.4 billion ($2.90 billion), increasing 8.7% year-on-year. Investment in the domestic copper smelting sector amounted to RMB 7.76 billion ($1.05 billion) over the nine-month period, up 3.96% year-on-year.

China's 73 major nonferrous metal enterprises generated total revenue of RMB 489.2 billion ($66.20 billion) in the first nine months of this year, up 37% from the same period last year. The country's 23 major aluminium smelters generated a profit of RMB 25.5 billion ($3.45 billion) from January to September this year, up 19% year-on-year, while the 22 major copper and nickel smelters reported profit of RMB 15.1 billion ($2.04 billion), up 17.1% over the period, and lead and zinc smelters recorded RMB 8.37 billion ($1.13 billion), up 36.3% year-on-year. 

Shanghai aluminium futures edged higher on support from the strong performance of SHFE copper and zinc contracts. The most traded 2008 February contract gained 0.83% to RMB 18,260 ($2,468.14) per tonne. 

"The strong copper and zinc market supported aluminium, but we should still keep an eye on aluminium spot prices to find the direction for futures prices," Cao Zhiyi, from Shanghai Jinpeng Futures, said.

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