Singapore — China's domestic aluminum smelting capacity is expected to reach 40 million mt/year by end-2015, up 14.3% from around 35 million mt/year at the end of 2014, an analyst from state nonferrous information division, Beijing Antaike, said Monday.
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The current forecast also reflected a sharp rise of 29% from the 31 million mt/year capacity seen at end-2013.
Continuing expansions of smelters in the western regions -- especially Xinjiang where production costs are comparatively lower than the rest of the country -- was the driving force for the country's rising capacity.
Aluminum production capacity in Xinjiang alone is expected to reach about 6 million mt/year by end 2015, compared with around 4.5 million mt/year at end 2014, the Antaike analyst said.
Capacity in Xinjiang stood at around 3 million mt/year in end 2013.
With the rising capacity this year, China's aluminum output in 2015 is also expected higher at about 31 million mt, up 10.7% from the 28 million mt achieved in 2014, and 24% from around 25 million in 2013, according to Antaike figures.
The expected increase in output has already taken into account possible smelter cuts due to prevailing weak metal prices, the analyst said.
"So far, about 200,000-400,000 mt of [output] has been [cut] since December last year," he said. "More cuts are likely if prices fall further and stay below Yuan 12,500/mt ... first half of 2015 is still expected [to be] weak, and prices may even test [levels] around Yuan 12,000/mt or below," he added.
The front month January aluminum contract on the Shanghai Futures Exchange closed at Yuan 12,825/mt ($2,094) on January 9, down from Yuan 12,985/mt on December 31, 2014.