China aluminium producers eye Indonesia after reaching domestic capacity ceiling

China's aluminium producers are eyeing Indonesia for setting up smelters like nickel manufacturers. Indonesia has shown interest in housing aluminium smelters as they have done with nickel. They want to stop exporting aluminium raw materials and working on getting foreign investors to build domestic smelters.

Moreover, as imposed by President Xi Jinping's government, China's domestic capacity ceiling has reached its limit. A new Chinese-backed aluminium plant has already commenced operations in the Southeast Asian nation. The project is also backed by Tsingshan Group Holding, the company that led China's billions of dollars of investments in developing nickel plants in Indonesia.

"Chinese aluminium companies have to go out of China if they want to expand, given the capacity ceiling," commented Wan Ling, an analyst at CRU.

 China contributes to more than half of global aluminium output after a dramatic market growth last century. But the expansion has now come to a limit, with the government imposing an annual capacity ceiling of 45 million tonnes to prevent oversupply and do away with old, inefficient plants.