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Bid to curb overheating in aluminum industry

By Wan Zhihong (China Daily)
Updated: 2007-05-09 08:51

China will take further macroeconomic control measures in the aluminum smelting sector, a move to speed up the restructuring of the aluminum industry.

The nation will work to ease overheating in the aluminum smelting sector and encourage more consolidation, according to theNational Development and Reform Commission(NDRC), the top planning body.

Blind investment in the aluminum smelting industry has already been discouraged. The investment in the sector last year decreased 9.6 percent, said the NDRC.

However, with the rise in prices for aluminum products and with the electricity shortage easing, there has been a rebound in aluminum and alumina production facilities. In January and February, the fixed-asset investment in aluminum smelting increased by 124.2 percent over last year.

"China must curb blind investment in the aluminum industry. Aluminum projects that fail to meet industry policies, environment evaluation and other related regulations should be stopped," said Lang Dazhan, deputy director of the aluminum department of China Non-Ferrous Metal Industry Association.

This year China's aluminum output is expected to reach 10.5 million tons, and the demand will be 9.6 million tons. The rapid output growth, compounded by the curbs on aluminum exports, will ease the price of the metal in the domestic market, he said.

Aluminum prices have risen in recent years, buoyed by high costs and strong demand at home and abroad. Now there are more than 90 aluminum plants in China with a combined production capacity of around 10 million tons.

"China should take further measures to quench the thirst of alumina companies to build new manufacturing capacities," said Lang.

Last year alumina production in the country jumped to 13 million tons, while price of alumina declined sharply because of ballooning production at home and abroad, he said.

With active investment in the aluminum industry in the past few years, overcapacity has become a pressing issue. The growth rate slowed down, and many aluminum enterprises suffered losses.

The government has focused its attention on the restructuring of the sector. NDRC said that since 2004, new aluminum manufacturing projects worth 17.3 billion yuan have been suspended or stopped.