Aluminium prices in China will remain low for the next two years

According to Fitch Ratings, for the next 2 years, Chinese aluminium prices will remain low as new cost advantageous plants are in line. Chinese companies have spent less on the structures of these new plants as they are located mostly in China’s western part where they can take advantage of cheaper power due to the region’s abundant coal supplies. Even the new aluminium facilities have their individual power plants to cut down the power costs as in order to keep their total production costs under control. In 2013 & 2014, the additional aluminium capacity will worsen the intense competition in a market that is already over-supplied.

In October 2013, the Chinese government released fresh guidelines to give more specific measures for tackling the aluminium sector’s persistent overcapacity. These measures include the closure of inefficient energy plants through different power tariffs as well as banning government subsidies. The government also plans to increase aluminium demand by promoting light-weight transportation vehicles.