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 of the metal used in autos may total 198,000 tons next year and 5.04 million tons in 2015, the Laredo, Texas-based group said in a report e-mailed today. China’s demand may gain 12.9 percent a year from 2011 to 2015, outpacing annual output growth of 9.8 percent, 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 U.S. producer. China’s aluminum prices may gain more than 10 percent 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 traded at $2,390 a metric ton on the London Metal Exchange today, having gained 23 percent over the past year. The cash contract on the Shanghai Futures Exchange may average $2,706 a metric ton, or about 18,034 yuan, in 2011, Harbor’s report said. Cash aluminum in Shanghai has averaged $2,430 a ton this year, and traded at about $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 percent 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 9.7 million tons of primary aluminum in the first seven months of this year, according to researcher Beijing Antaike Information Development Co. That’s about 46 percent more than the same period last year. China’s imports totaled 169,149 tons 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 percent of the country’s total, according to Shanghai Metals Market. Power accounts for as much as half of the cost of making aluminum.
A little more than 500,000 annualized tons were lost in August in Sichuan, Henan, Shaanxi, Guizhou and Shandong provinces, the main aluminum-producing regions, as local governments moved to reduce power consumption, Harbor said.
Henan province, the largest aluminum-making region, is going to cut output nearly 20 percent in the fourth quarter, reducing production by 180,000 tons, the Henan Nonferrous Metals Industry Association said on Oct. 9.
Aluminum Corp. of China Ltd., the nation’s biggest producer, plans to shut 330,000 tons of obsolete smelting capacity by 2011, equivalent to about 8 percent of its total, Chairman Xiong Weiping said in August. Overcapacity in the industry, estimated at as much as 30 percent, “will disappear” in the next three years as demand increases, Xiong said.
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