Exports of Aluminium Fall, Home Sales Grow

ALUMINUM exports from China, the world's biggest producer of the lightweight metal, could drop to their lowest level since 2002 next year as domestic demand grows and export taxes curb overseas sales.

Net exports of primary aluminum could fall to 70,000 metric tons from an estimated 85,000 tons this year, according to the median estimate in a Bloomberg News survey of four analysts and a trader. That compares with 548,000 tons last year and a peak of 625,000 tons in 2005, figures from CRU International Ltd show.

The decline in aluminum exports next year signals that China, the world's fastest-growing major economy, may become a net importer of the metal, used in cars and planes, as early as 2009. That would bolster world prices as China switches from being a significant net exporter, said Wan Ling from CRU.

"This should be supportive for prices" on the London Metal Exchange, said Wan. But, he added: "Chinese prices could come under pressure as domestic production keeps growing."

Global aluminum prices have fallen more than 10 percent this year with supply exceeding demand. The benchmark LME contract for delivery in three months traded US$6 higher at US$2,510 a ton at 12:55pm yesterday.

World aluminum supply exceeded demand by 56,900 tons in September, the World Bureau of Metal Statistics said on November 21. The surplus totaled 320,000 tons in the first nine months.

However, China's domestic surplus will shrink next year as production slows and demand catches up, according to Beijing Antaike Information Development Co.

The local surplus will decrease to 160,000 tons from an estimated 340,000 tons this year, said Wang Feihong, an Antaike analyst.

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