China, the world's top aluminium market, will continue to see a surplus in the next five years as output exceeds consumption, cutting profits for smelters, an official of the China Non-ferrous Metals Industry Association said on Wednesday.
Production is likely to rise 24 percent from last year to 20 million tonnes this year, fuelled by new capacity and the restart of idle facilities, Hu Zhang Ping, chief of the powerful industry body's aluminium division, told reporters on the sidelines of a forum in the eastern port city of Ningbo. He said capacity would rise to 25 million tonnes this year, a rise of 14 percent from last year.
"In the 12th five-year plan period, the industry will still have a surplus. Demand will rise but it won't be able to catch up with the new capacity increase," Hu told the same forum, referring to the period from 2011 to 2015. Most smelters that had idled some capacity were restarting it, he added.
Electricity supplies fell between December last year and January, forcing smelters in the major producing provinces of Henan and Guizhou to close well over 1 million tonnes of capacity. "Output should reach 20 million tonnes this year," Hu said.
Hu's 2011 output estimate was higher than the 19 million tonnes expected by top aluminium producer Chalco and a forecast of 19.5 million tonnes by Antaike, a research arm of the industry body. He told the forum that China's aluminium industry was entering into a low-profit period and that supply would stay above demand in the domestic aluminium market in 2011-2015.
Annual capacity of primary aluminium is likely to rise to 30 million tonnes in 2015, he said. In order to limit the capacity rise, Beijing has stopped accepting applications for new aluminium smelting projects, Hu said.
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