Mining Journal > Production and Markets > China’s aluminum import demand to surge, Harbor says

Aluminum imports by China, the world’s largest producer, may increase more than 25 times by 2015 as surging local demand outpaces growth in output, according to research group Harbor Intelligence.

Imports may total 198,000t next year and 5.04Mt in 2015, the Texas-based group said in a report e-mailed today. China’s demand may gain 12.9% annually from 2011 to 2015, outpacing annual output growth of 9.8%, said the report from Harbor, which has analyzed the global aluminum market for more than 20 years.

Increased purchases by the world’s largest metals user may support an advance in global prices, benefiting companies such as Alcoa Inc, the biggest US producer. China’s aluminum prices may gain more than 10% next year as an energy-saving drive forces output cuts, Harbor’s report also said.

“Supplies are expected to tighten in the next few years as China reduces output and demand for a metal that has few substitutes increases,” Li Ye, an analyst at Minmetals Starfutures Co said from Shenzhen today.  Harbor’s projection “certainly sounds like a lot of metal,” said Li.

Three-month aluminum has gained 23% over the past year. The cash contract on the Shanghai Futures Exchange may average US$2,706/t in 2011, Harbor’s report said. Cash aluminum in Shanghai has averaged US$2,430/t this year, and traded at about US$2,408 today.

“China will increasingly import primary aluminum,” the report said. “Although there has been talk that the output cuts are being replaced with new, more efficient capacity, our view is that conditions are no longer in place for China’s aluminum output to over-deliver as it did in the past.”

Growing Chinese aluminum demand will help to boost global use by 13% this year, Alcoa said last week as it reported earnings that beat analysts’ estimates. Chief Executive Officer Klaus Kleinfeld said that growing middles classes in China, Brazil, India and Russia were “driving demand.”

China produced 9.7Mt of primary aluminum in the first seven months of this year, according to researcher Beijing Antaike Information Development Co. That’s about 46% more than the same period last year. China’s imports totalled 169,149/t in the first eight months of 2010, customs data show.

China has started to control production of energy-intensive plants this year as the central government aims to meet an energy-saving target in its 11th five-year plan, which ends in 2010. Power usage by aluminum makers accounts for 6% of the country’s total, according to Shanghai Metals Market. Power accounts for as much as half of the cost of making aluminum.

Aluminum Corp of China Ltd, the nation’s biggest producer, plans to shut 330,000/t of obsolete smelting capacity by 2011, equivalent to about 8% of its total, Chairman Xiong Weiping said in August. Overcapacity in the industry, estimated at as much as 30%, “will disappear” in the next three years as demand increases, Xiong said.

Oct 12 (Bloomberg)