CHICAGO Alcoa Inc. expects global aluminum demand to increase 7 percent in 2013 despite concerns about overcapacity in China hindering the ability of Western countries to reduce an aluminum supply overhang.
The Pittsburgh-based aluminum producer expects aluminum demand in China to rise 11 percent in 2013, Alcoa chairman and chief executive officer Klaus Kleinfeld said during an earnings call July 8.
At the same time, China is also moving to cut capacity at high-cost smelters on its east coast while slowing the addition of new capacity in the west, he said. "In total, the capacity that we see in China is pretty stable."
The Chinese aluminum industry plays in a "different universe" than the aluminum industry elsewhere, Kleinfeld said. "Lets call it earth aluminum and China aluminumand they rarely communicate ... because (Chinese aluminum producers) are high cost and they are not going to export," he said, estimating that more than 40 percent of Chinese smelters are "under water."
In addition, "China Inc." is increasingly wary of adding new aluminum capacity because of the energy, water and imported alumina necessary to support it, in addition to the pollution any new plant might generate, Kleinfeld said. Thus, boosting aluminum capacity might be seen as not having the potential economic benefits necessary to offset those costs, he added.
"So I am pretty confident that we will continue to see restructuring going onand probably in an accelerated fashion under the new leadership," Kleinfeld said, referring to the administration of new Chinese president Xi Jinping.