Hong Kong — Tensions between China and the US have dampened Chinese consumer confidence and undermined domestic demand for aluminum products, China Nonferrous Metals Industry Association said Thursday in a market update.
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Even if China was to help its producers by completely removing export taxes on certain aluminum products, a reduction in smelting capacity in recent years along with higher production costs meant export volumes were unlikely to grow significantly, CNIA said.
As a result, CNIA said most demand growth would have to come from domestic markets.
Certain consumer segments, notably the auto sector, have been extremely weak over the past 18 months, with bearish sentiment compounded by the trade situation with the US. Last year, Chinese auto production and sales fell for the first time since the early 1990s, government data showed.
Despite this, China's State Council has advocated the production of new aluminum products in coming years to cater for technological developments in the auto and aeronautical sectors.
The association said China's aluminum scrap supply was unable to meet domestic demand because of the tightening of China's scrap import policy.
CNIA said it expected China to remain a net alumina importer this year, as last year's 1.46 million mt rise in alumina exports was due to global alumina shortages and was unlikely to be repeated in 2019.
Separately, Guangxi Zhuang Autonomous Region said it plans to produce 12 million mt/year of alumina and 4.8 million mt/year of aluminum ingots by 2025, according to the Ministry of Industry and Information Technology. This would be up from 8.35 million mt/year and 2.05 million mt/year, respectively, at present.
The province is targeting recycled aluminum and processed aluminum production of 1 million mt/year and 5 million mt/year, respectively, according to the ministry.
The ministry hopes that by 2025, some 80% of its alumina output would be smelted locally, along with 80% of its ingots, in a bid to lift the value of the local aluminum sector to Yuan 200 billion ($29 billion).
Guangxi's 2019 aluminum output capacity is forecast to rise to 2.6 million mt/year from 2.25 million mt/year in 2018, data from Guangxi Liuzhou Yinhai Aluminum showed.
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