China Won't Cut, Defer Aluminum Output At Current Prices-Macquarie

BAHRAIN, Sept. 25 -- Aluminum prices aren't low enough to see China cut output or delay planned new capacity, a senior analyst at Macquarie Securities U.K. said Tuesday.

Speaking at the Metal Bulletin aluminum conference in Bahrain, Max Leyton said this means cuts won't be seen in the world's largest producer for the time being.

"Prices are not low enough to see China adjust output or significantly delay what for the most part are relatively low-cost capacity additions scheduled for the second half of 2010 and 2011," he said. "We don't think significant adjustments will be necessary until capacity utilization ramps back up and financing deals start to unwind in the next 6-12 months at least."

Leyton said China is the world's highest cost producers, and has raised the operating costs of global smelting capacity by raising the level of global demand.

"The Chinese supply curve is expected to flatten and shift over time," he told delegates. "Aluminum demand growth is set to be the strongest of all the base metals over the medium to long term, driven by China," he said.