China Resumes 1.4 Million Tons of Aluminum Capacity

By Richard Dobson

May 13 (Bloomberg) -- China, the world’s largest aluminum producer, may have restarted as much as 1.4 million metric tons of capacity in April, according to an analyst at Aluminum Corp. of China Ltd.

The country may produce as much as 12.6 million tons of the metal this year, Ru Xiaojie, an analyst at the company’s Henan branch, said today in Beijing at a conference. Ru said after her speech that the analysis represented her own views.

Alcoa Inc., the largest U.S. aluminum producer, this week said there is still “significant oversupply” in the global market and restarts by Chinese smelters aren’t needed. Chinese smelters may resume output at too many smelters in April and May, which will depress prices, the China Nonferrous Metals Industry Association also said this week.

“Due to a quick restart of idled aluminum smelters in April, the demand for the raw material alumina has increased, leading to restarts of alumina refineries as well,” Ru said.

Aluminum futures in Shanghai rose 0.2 percent to 12,860 yuan a ton at 9:48 a.m. local time. Prices have rallied 12 percent this year after the government bought excess metal to support domestic producers.

The country may have a surplus output of between 570,000 tons and 680,000 tons of alumina this year, Ru said. Domestic production of alumina may reach 22 million tons, and imports may be 4 million tons, she said.

Bauxite is a raw material refined into alumina, which is then smelted into the aluminum metal.

China has about 9 million tons of alumina-making capacity under construction or in planning stages, the China Nonferrous Metals Industry Association also said today.

The country already has 33 million tons of existing alumina capacity, said Lang Dazhan, deputy head of the aluminum division at the association.

To contact the reporter on this story: Richard Dobson in Shanghai at rdobson4@bloomberg.net