China Idles 41% of Its Aluminum Capacity in March

BEIJING, May 13 -- China, the world's largest producer of aluminum, had idled 41 percent of its smelting capacity as of March because of weak demand and lower prices, the Ministry of Industry and Information Technology said.

    About 7.4 million metric tons of annual capacity out of the country's 18 million tons was idled, Jia Yinsong, an official with the raw material division at the ministry, said today at a conference in Beijing.

    Aluminum futures in China have rallied 12 percent this year as China's State Reserve Bureau, also known as SRB, bought the metal to support domestic smelters. Chinese producers could restart too much capacity in April and May, which would lead to a price decline, the China Nonferrous Metals Industry Association said.

    "SRB's purchase can improve domestic demand, but if prices improve and smelters restart idled capacity, prices would fall again," Jia said. "State purchases should work together with production control."Aluminum futures rose 0.2 percent to 12,810 yuan ($1,877) a ton at 10:04 a.m. local time in Shanghai.

    Alcoa Inc., the largest U.S. aluminum producer, yesterday said there is still "significant oversupply" in the global market and restarts by Chinese smelters aren't needed.

    The county has also idled 42 percent of its alumina capacity, or 14.3 million tons, in March, Jia said. Alumina is processed into aluminum.

    (Source: Bloomberg)