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Limited Impact on Aluminum Market from China's Move to Eliminate Inefficient Capacity
Aug 10, 2010 11:55CST

SHANGHAI, Aug. 10 (SMM) -- According to China's Ministry of Industry and Information Technology's latest list of companies required to eliminate inefficient capacity by the end of September, a total of 17 aluminum producers are involved, with the affected capacity of 371 kt/yr. According to SMM statistics and investigations, most producers involved have already been idled, with only 15% of capacity still in operation. In this context, it will be easy to achieve the goal of capacity shutdowns.

The target of inefficient aluminum capacity shutdowns will not have substantial impact on China's aluminum market supply and demand given China's existing aluminum capacity of over 20 million mt/yr currently, let alone only limited capacity to be shut down recently. However, SMM believes the elimination of outdated capacity is a sustainable task, and China's Central Government has detailed the plans to save energy and cut emission, as well as to curb overcapacity in high-pollution, high-energy-consuming and resource-dependent industries, so more and more inefficient capacity will be phased out in the future. Meanwhile, the overcapacity in China's aluminum industry will not be changed completely only relying on government efforts, and the self-adjustment function of market economy can also help eliminate high-cost aluminum capacity in order to improve domestic aluminum market supply and demand conditions.


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