SHANGHAI, Oct. 23 (SMM) – The National Development & Reform Commission (NDRC) has urged on its website October 21 Xinjiang to strictly control the overgrowth of its aluminum capacity after a survey on the development of aluminum and polysilicon industries in Xinjiang.

The Chinese aluminum industry has staged rapid growth in recent years despite control efforts.

The NDRC has clarified its stance on control over newly-added aluminum capacity since 2005. The NDRC reiterated in 2009 that newly-added and expanded capacity should not be approved within three years in principle. However, China’s aluminum capacity actually soared up to 23 million mt in 2010.   

Nine Government Departments, including the Ministry of Industry and Information Technology, announced tougher measures on the domestic aluminum industry in mid-April 2011, and called off aluminum projects under planning and cancelled preferential policies to local aluminum smelters. Xinjiang, however, was not on the list of provinces and regions required with explicit restrictions over aluminum capacity. 
    
Electricity price at aluminum smelters with self-owned power plants in Xinjiang, rich in energy resources, is merely RMB 0.2/kwh, RMB 0.3/kwh lower than in those in Henan and Shandong, major production regions of aluminum. If it needs 14,000 kwh of electricity to produce 1 mt of aluminum, production costs in Xinjiang will be RMB 4,200/mt cheaper than those in other parts of China, attracting smelters to build plants in the region. Meanwhile, the region has stepped up efforts to develop the local economy, and incentive measures should be introduced to investment, also providing favorable investment environment.   

SMM has confirmed that newly-added aluminum capacity in China hit 3.4 million mt in 2011, mainly in Xinjiang and Qinghai. Major domestic aluminum companies, including East Hope, Henan Shenhuo Group, Aluminum Corporation of China, Shandong Xinfa Aluminum & Electricity Group, and China Power Investment Corporation, all invested in these regions.  
  
The rapid overgrowth of aluminum industry in China has put great pressure on domestic energy and environment capacity. The commissioning of new aluminum capacity has aggravated oversupply pressure and made it less likely for Chinese aluminum smelters to reverse losses.

The latest survey conducted by the NDRC has disclosed the aluminum capacity surplus in Xinjiang. If China introduces new regulation measures over the domestic aluminum industry, Xinjiang will not be excluded from the list again.