SHANGHAI Two months after
it vowed to "vigorously" eliminate obsolete facilities, the
Chinese government has laid out a plan to eliminate less than 1
percent of the countrys aluminum capacity.
China aims to idle 273,000
tonnes of outdated aluminum capacity this year, the Ministry of
Industry and Information Technology (MIIT) said April 11.
The country had 27.65 million
tonnes of aluminum capacity at the end of 2012, the ministry
noted in a report issued Feb. 16.
The countrys leadership
has time and again made claims about the desire to consolidate
Earlier this year, the MIIT, the
National Development and Reform Commission (NDRC) and 10 other
ministries set out guidelines for the aluminum industry,
calling for fewer aluminum business conglomerates with "core
competitiveness and international influence" by 2015, and for
the top 10 smelters to account for 90 percent of the
countrys total production capacity.
Market participants believe the
drive to carry out these plans is missing.
Smelters in the northwest of the
country have been expanding as energy is cheaper in that
The difference in power rates
between Chinas east and west can be as high as 0.3 yuan
(5 cents) per kilowatt-hour, according to Wen Xianjun, vice
chairman of the China Nonferrous Metals Industry Association
"Captive low-cost power in the
western provinces has enabled Chinese capacity to shift down
the cost curve," BHP Billiton Plc said earlier this year. "The
cost curve will further flatten and the price is expected to
remain below the marginal cash cost of production."
In an oversupplied market,
falling aluminum prices have made profitability tough.
Aluminium Corp. of China Ltd. (Chalco) reported a huge loss
last year on lower metal prices and higher costs, and was
expected to remain in the red in the first quarter of 2013.
China also aims to shut 665,000 tonnes of copper smelting
capacity, 879,000 tonnes of lead smelting capacity and 143,000
tonnes of zinc smelting capacity this year, MIIT said.
A version of this article was first published by AMM sister
publication Metal Bulletin.